Forming group to purchase a preforeclosure comm. prop in South TX

6 Replies

I met an investor this evening that is looking to close out a group brought together for the purchase of a preforeclosure commercial property in McAllen, Texas. I know this gentlemen to be someone I would love to work with in the future. I want to present him value, I'm not looking for anything in return other than knowledge and relationships. How would someone recommend that I go about locating possible JV prospects for this group, as I am not familiar with this commercial space. I was lucky enough to end up sitting next to this gentleman at a seminar not related to real estate. Random luck, I don't believe in that. I think it is an opportunity. I've read many times on here that a great way to form a relationship with a mentor is to present value (or do something they don't want to do) or hopefully in this case it may be just enough to show some initiative.

The bank is asking 3.5M for the property, this is out of my league, or bigger than my pockets, you could say.

I was hoping maybe someone like @Joel Scott, or @Joe Fairless, maybe even @Ben Leybovich, or @Bill Gulley or anyone, could help with some ideas on how I could help play matchmaker in a situation like this.

The issue is that unless you're principle in the transaction, finding investors for someone else will be viewed as selling investments without a license by the SEC - you really should not do that!

Now - if you formed an LLC whereby you were the managing partner, and then your LLC invested in the deal, that'd be cool. But, understand, you'd be taking a cut of your partner's money, so it's unreasonable to think that they'd be too happy...

No easy answers here. Main thing is this - you have to remember what you are ding, which is raising money for an investment. Unless it's your investment, then what you are doing can be seen as selling securities, for which you don't have a license. :)

@Jessie Bienvenu

Yep, @Ben Leybovich hit the nail on the head...you're jumping into an arena that can get you into more hot water than you can ever imagine.

Excitement and enthusiasm aside, think about what you're saying. You're trying to find JV Partners for an investment you will not be participating in, that you have no knowledge of and that you don't understand...that is a recipe for disaster, and it's the best way to destroy your reputation before you ever get off the ground. If the "investor" you speak of is experienced, knowledgeable and connected, why hasn't he been able to "close out" the investor pool? Why would an experienced investor seek out a novice investor with no knowledge of the commercial sector in an attempt to locate passive investors. This thing just sounds way too fishy to me. I've seen many newer investors make the mistake of trying to run before they walk...with disastrous results.

I recommend you take your time building relationships and research well those who try to bring you into investments that they know you're not ready for.    

Originally posted by @Guy Gimenez :

@Jessie Bienvenu

I recommend you take your time building relationships and research well those who try to bring you into investments that they know you're not ready for.    

 This was my thought, but I held off. If this "experienced" investor knows that you're trying to do this, and does not stop you, the one of two things is true:

1. He is not as knoweldgable as you make him out to be, or

2. He is an *** for allowing you to stick your neck out where it shouldn't be, and put yourself at risk before you even start...

Neither of those are good!

Thank you, everyone for taking the time to comment, and informing me of the legal ramifications and landscape of what I was considering.  Some lessons learned here for sure. I would like to say, that this is a case of me being overzealous.  I was not asked to, nor was it suggested that I attempt to bring in investors to this deal.  It was two people sharing there trials and tribulations from a day in real estate investing.  I was talking about an offer I had made was beaten out by 10k from another offer.  He was telling me about how one of the members of his group decided to pull out this late in the deal and he was going to need to replace his interest.  

I after the fact, thought to myself about maybe I could introduce two people that could benefit from that introduction.  Not trying to get involved in the deal.  But, as you guys have made it clear, on the sidelines of that one is where I belong.  I was just hoping to possibly create and strengthen relationships.

As you can tell by the inquistive nature of this post, I was not sure of how I should handle this ambitious/foolish idea I had.  Thanks, for everyone taking the time to reply to this, and providing me with some framework on how to identify an opportunity that is for me, and what to look for when an opportunity truly does present itself.

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