Real Estate Pool (Syndicate)

3 Replies

I along with several friends want to pool our monies together to buy 1-3 duplexes.  The other two parties will only be investors, while I'm the active party finding the property, overseeing any renovations needed, hiring/overseeing the property manager, etc.

I've read prior posts that someone in my capacity (b/c this is a significant time commitment), may want to structure the deal so I'm compensated (and the other two investors are agreeable with this)

One post mentioned a finders fee of anywhere from 1-3% of the property value, then an ongoing 1% of gross rents plus some sort of cut of the end profit when we sell, later down the road. 

curious to hear how others setup their own pool before like this and what was their fee structure. also - we'll be using an LLC, but should I as the managing person setup my own LLC and officially have that as the Managing Entity?

any color/insights would be appreciated. thanks!

John, I see that this was posted over two years ago but, if you are still interested, I'd be happy to explain how I am working a similar structure.

@Jacob Volin though the post is old, the topic is still relevant. Please do share what you did. 

@Karen Margrave No problem!

I chose to create an LLC with specific classes. We began by calculating our individual equity based on contribution. As the 'mini-syndicator', I take an additional 10% (profits, losses, equity, etc) for my work. Then, within the operating agreement, I established two classes of ownership. Class A membership is the managing membership, of which I own 100% (I do all of the legwork for the group of investors). I have priority purchasing rights of equity when members want to sell and have the rights to manage the company and direction in any way I'd like. Class B membership is divvied up based on my multiple investors initial contributions less that original 10% that was given to me.

While it is pretty black and white, it is agreeable by all involved and solidified by strong legal framework. If that didn't make sense let me know!

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