So I know that this is semi-complicated with bringing together a bunch of investors to buy real estate. I was hoping to connect with someone about how to structure a syndication with the investors what legal entity would need to be created to hold real estate.
My plan was to put together about 1M USD to buy properties around the US for a 12+ cap rate. And when I say "around" I don't mean 1 here and there, I mean like 10 in any one city to cut down on travel costs. I would hope to accrue about 20-30 properties with that seed money.
For people that have done this before, would you have resource that would help with creating a professional prospectus and any other documentation that an investor would find helpful when considering to invest?
We use LLCs. Membership interest can be other companies or individuals and the Operating Agreement spells out contributions and distributions. All members get a K-1 annually. Overhead costs are low, and there is no need to "clump" money at one time since LLC OAs can define capital contributions for future acquisitions. BTW, the LLC structure is how American Homes 4 Rent set up their holdings, e.g. AH4R-1 ... AH4R-9. And they generally put 100+ properties in an LLC before exchanging for long term financing.
For $1M, I wouldn't go the S-11/Prospectus route. Unless you don't have any partners under consideration and want to solicit strangers... then you may want to try to raise money. But $1M? Way too small, IMO.
Brian Burke does this. He discussed some of the aspects of it on Episode 3 of the BiggerPockets Podcast.
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