Investor · Houston, TX · Member since 2022 · 10 posts · 6 votes
We got a property under contract as a wholesale deal. The purchase price is 30% below the ARV (~420K-450K). We could make this deal as a fix and filp (ROI = 12%, 6 months) or buy and hold. The plan is to seek joint ventures with other passive investors assuming they ONLY contribute capital, nothing else. As the operator of this deal, what should be a reasonable management fee (%) for other investors assuming we manage the deal from start to end? Thank you for sharing your experience and thoughts.
Houston, TX · Member since 2021 · 72 posts · 35 votes
4y
might wanna be careful with the verbiage of your post bud, because even though you're not intentionally doing it you're kind of advertising your deal as a small syndication, and if its not registered with the SEC you can land in some hot water. Just one persons thought though.
Houston, TX · Member since 2021 · 72 posts · 35 votes
4y
might wanna be careful with the verbiage of your post bud, because even though you're not intentionally doing it you're kind of advertising your deal as a small syndication, and if its not registered with the SEC you can land in some hot water. Just one persons thought though.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
4y
@Mark Woo thanks for posting! Always great to hear from a fellow Texan. This property is a single family home, correct? If people are lending you money for the transaction, that's just a "private lender". You can structure it to just have them lend you money and you can pay them back when you refinance type of thing. I hope that makes sense how I am describing it.
Lender · Tampa, FL · Member since 2020 · 202 posts · 116 votes
4y
@Mark Woo I 100% concur with @Joseph Medina. The fact that you stated they are ONLY contributing capital could read as they are completely passive, which is not a far step at all for an attorney to read this as offering security. This is an issue I consistently see being violated on BP, investors "advertising" equitable positions. If you were asking for a loan then the lender is creating the security themself being the MTG/ DOT. But when you hold yourself out as being the one who will be the active investor and they are a passive investor then you are treading on murky waters. Care should be taken, but best wishes and much success, and I hope you are able to do what you plan on doing.
might wanna be careful with the verbiage of your post bud, because even though you're not intentionally doing it you're kind of advertising your deal as a small syndication, and if its not registered with the SEC you can land in some hot water. Just one persons thought though.
Thank you so much for the note. I will keep that in mind.
@Mark Woo I 100% concur with @Joseph Medina. The fact that you stated they are ONLY contributing capital could read as they are completely passive, which is not a far step at all for an attorney to read this as offering security. This is an issue I consistently see being violated on BP, investors "advertising" equitable positions. If you were asking for a loan then the lender is creating the security themself being the MTG/ DOT. But when you hold yourself out as being the one who will be the active investor and they are a passive investor then you are treading on murky waters. Care should be taken, but best wishes and much success, and I hope you are able to do what you plan on doing.
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
4y
Hey Mark, I'm happy you asked the question. You aren't in the wrong unless you take money from an in investor found by an solicitation against the SEC's rules. This is a great place to get these things answered. The joint venture will require work and risk on the part of whatever investor you find. These deals aren't securities and you don't have a legal problem with advertising. You do have a big risk in simply finding someone on the forums so you will need to do a whole lot of vetting each other before signing. If you are looking for a truly passive investor, then you do have a security and likely cannot advertise. A better way would be @Andrew Postell's suggestion that you borrow money with a rate large enough to attract this 'private money'. Another way is to do some creative financing with a lender. There are many here at BP who would be happy to talk with you.