All Forum Posts by: Bennet Sebastian

@Khaled Seirafi industrial space in my market (Orlando) is mostly leased as NNN, is it different in your market? It will definitely be more marketable if you are selling a net leased property. How are your current NNN expenses compared to those of your competitors? It may be very low if you've had the property a long time. So tenants may already expect to pay a higher amount in NNN expenses and you can be transparent with potential tenants about it.

@Umair Khan I am a CCIM but I agree 100% with what @Steve Morris said. Check out https://breakintocre.com/. You can learn a ton about deal analysis there for a tiny fraction of the time and cost of a CCIM designation. 

Are you planning to occupy one unit and rent out the others? 

@Jonathan R McLaughlin thanks for the feedback. I generally think there should be a disproportionate share of equity going to the general partner who does 99% of the work. Obviously there are many ways to structure that but based on what I've seen it would most likely be a preferred return to the LPs and a split of the profits after that. 

@Ashish Mike Angelo Thanks for the input. However he is not expecting to give me a promoted interest for my sweat equity. He feels his loan guarantee is worth the same as my sweat equity. This is fine if I'm doing $3M deals that I otherwise would not have been able to do before but other than that I think I'm better off just doing smaller deals with a pool of smaller silent investors for now. Best case is I find enough other investors and do deals that don't require him to put in more in than 20% of the total equity at which point he wouldn't have to do a personal guaranty.  

@Evan Polaski, @Jerel Ehlert, @Inessa Stysis, @Ashish Mike Angelo, @Jonathan R McLaughlin ... please see update above and let me know what you think. Thanks. 

Update: So I just played a round of golf with this family member this morning and we talked a little bit about this. Initially he was talking about sitting down with his brother but I managed to convince him to do a side deal with just me. When I asked what type of terms he would be looking for he indicated that he wants an equal split for equal cash. I.e. we both profit in proportion to the percentage equity we put in. Obviously he has way more cash than I could possibly match so the deals would either end up being very small or he would take the lions share of the profits. His rationale is that he has the financial strength to guarantee a loan that I otherwise might not be able to secure. But I would be the one sorting through hundreds of deals to find the right opportunity, conducting due diligence, lining up financing, handling construction, leasing, management, and finally disposition. We didn't even discuss fees but I can already assume his expectation would be that I wouldn't take any fees. 

This is not an arrangement I have heard of before but that doesn't mean it doesn't have merit. Under what circumstances would a deal provider be inclined to work with an investor on these terms?  

@Evan Polaski thank you for the feedback. I may just be imagining the worst case. 

I’m an experienced commercial investor, general contractor and licensed broker having done about ten small commercial property flips over the past ten or so years. I had an equal partner on the first flip and then did the rest with my own money. I want to start syndicating larger deals now and try and have a stable of limited partners that I could go to for equity. I’ve only managed to line up a couple at this point and it’s not nearly enough to do what I want to do. However I have a very close family member who is loaded and could provide most if not all of the cash I would need for the foreseeable future. But there is a caveat.
He invests with his brother on several other businesses (mostly car washes) where his brother is the operator and he is the cash provider. So when I approached him about investing with me he said lets all three sit down and discuss it. I was afraid of this because I don’t necessarily see the value his brother would bring to the table considering I’m the only one with relevant experience. But he trusts his brother so I don’t think I have a choice but to work with the both of them if I want the money. 
Their dad also gets involved in most of their business dealings so that would be yet another person that would want input on the investments and how we would structure them.
When I started down the syndication path I was just going to take the traditional road which was I’m the deal provider and everyone else is the silent money provider. Now I’m at a fork in the road and don’t know which path I should take. Do I put myself at my extended family’s mercy and cater to the types of deals they want on the partnership terms they will agree to or continue down the path I started on? Granted I don’t know the terms yet but I suspect it won’t be the traditional syndication arrangement where I would earn my fees and promoted interest on the cash flow.

Thanks for your help BP.

@henry 

@Henry Clark that was very kind of you to lay it all out there. Thank you for sharing your knowledge on the topic.