I am looking to setup a realty investment company funded by investors. What would be the steps to create such company, which will be using 2 streams of income, rental and buying/selling properties ?
Are you planning to start a small operation with a few (2-4) acquaintances (a partnership) or are you thinking of creating a company/fund where you take investments from a larger group of folks?
The first is quite straight forward: you would draw-up a shareowner's agreement and incorporate with each of you owning a portion of the company. Alternatively, you could create a company on your own and have a partnership with other individuals ... or dispense with the company altogether and use a partnership.
You should probably seek our an accountant and attorney to assist you in creating the ownership structure which best meets your immediate needs while allowing for your longer-term objectives.
If it is the latter you have in mind - pooling funds from different investors/lenders and then purchasing assets with the funds, you are entering the realm of private placements and investment trusts ... you will definitely require the services of an experienced attorney and may well be required to be licensed.
THANKS for the reply Roy, actually I am planning to sell the shares (privately) of our corporation to the investors and then using those funds to acquire more real estate, Our corporation already has acquired 2 properties through our initial investment.
Your plans will be subject to securities regulation and will necessitate the preparing and filing of a prospectus for a private offering of corporate shares (or the selling of units in a private REIT). Your investors will need to qualify as "accredited" and there are additional restrictions on how you can advertise your shares and solicit investors.
This is not a "do it yourself" endeavour - you will need a lawyer with securities experience and, perhaps, an investment broker to help you with the private placement.
Unless you are acquiring mid to larger properties (i.e. apartment blocks, office buildings, retail strip malls, etc) with values, and acquisition costs, in the millions, the overhead of a private placement is probably not justifiable.
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