All Forum Posts by: Zach Herbert-Burns

@MasonLiu,

Thanks for your input! So if I'm understanding you correctly, the 1-2% management fee is based off a % of the NOI, and then once I take a management fee, the LP will receive their 10-12% preferred fee as a portion of monthly NOI and will receive an additional 15-20% above that if/when we exit if there is a profitable capital gain upon the sale? I will be developing in an Opportunity zone - so my minimum hold period to realize the tax savings on capital gains is 10 years. Would you recommend a fund term of 15 years, for example, if I plan to sell right at the 10 year mark? What is a good strategy to pay back LPs if I plan to hold for 20+ years?

My question is: What are reasonable terms for an LP in a commercial / multifamily investment that I can draft up and have my CPA and lawyer review? I don't want to come to the table empty handed. In order to fund both deals, I will need to bring on limited partners. I want to make sure that the terms are reasonably enticing for an LP to invest with me, but not take over all profit and leave me out.

The deals: 

I am under contract on two commercial properties; 1. 11,000sq/ft lot with a rundown building currently standing - I plan to tear it down and build a 17,000-20,000 sq/ft 4-story mix-use commercial stores on ground floor and 18 units on the 3 floors above, and 2. Buy a 13 acre run down old mill property which has 10 developable acres and an operating 6 unit dry storage warehouse and small 1,500 sq/ft office building. 

Property 1: Purchase is $275,000 and construction costs are expected to be just shy of $6M. 

Property 2: Purchase is $1.5M for all 13 acres which includes the warehouse, 6 unit office space, and 10 developable acres. I have no current development plans in place yet - I'd be looking to either sell off the 10 developable acres and keep the warehouse and 3 acres to build a few SFH myself or partner with venture capital to develop the 10 acres it for me - while my equity in that deal would be the land itself.

I plan on investing $350K split between both deals - unsure yet how I want to allocate that capital. 

Thank you!

Hi all, I am trying to open up an LLC for my first RE deal and I want to put cash into the LLC's account, once I've opened it without any taxation. Is there a limit to how much I can transfer to the LLC's account without being taxed? Does it follow the same personal gift tax guidelines? I have about $100,000 dollars that I want to put into my LLC to get it off the ground, but I'm worried about tax implications. I know that I can gift any one up to $16,000 without taxation - does this fall under the same guidelines?

Hi BP'er. I am new to investing in RE and am in the process of starting an LLC for our first big RE deal. I need to put an address in the paperwork to start the LLC and want to put a PO box or UPS mailbox as the address. BUT, in order to open one of those I need the date the LLC was registered. It seems like I need the LLC started to open a PO box but I need a PO box before I can open my LLC with the State. If I put my personal physical address down in order to open my LLC can I change my business' address later on? Any advice? Thanks!