Is anyone else out there confused by how to put together a partnershp? I have to say that if I didn't have a very smart partner - who is great at this - I would be lost too! And I am just talking about partnering on specific real estate deals. What about raising private money and then giving some profit sharing to the private lender? OY VEY!
For instance - I have 3 different deals going on right now - all of them entail raising money. If you raise money to do your deals - boy - you better know what you are doing and what you are offering.
For instance - first of all, I have a new business partner who I am doing specific real estate projects with. He and I have our own seperate LLC's. Now he and I are doing 2 specific projects together - now each of those projects has to have it's own LLC. One of them is an income producing real estate deal and one is to buy, rehab, sell and hold SFR here in L.A. NOW get this:
1) We have a new LLC for our L.A. Meeting Space & Conference Center business and the private money we raise to get that project off the ground - those lenders will become partners in the business. Why? As I understand it - since we are raising money from different sources for this one project - in order to stay SEC compliant and not sell securities - the easiest thing was for us to bring in General Partners. Now they are part of the business. Also - we are not taking the money as capital contributions from these partners, but rather loans that will be paid back with interest! Considering that they also get 10% share in the business this is a pretty good deal I would say!
2) Gary (my partner) and I are also buying REO's (and some subject t & owner financed properties) here in L.A that we will fix up and sell and hold. We are raising a lot of money for these because we are going to buy small REO packages (about one million $). So for this - we are actually creating a fund! Oy vey - Gary is the one putting this together - and thank god for that. I have the experience in pulling people together and he has the experience in the legalities and paperwork. He's the brains, I'm the brawn. It's a winning combination!
All I guess I am trying to say is that there is a lot to know when it comes to creating partnerships like this. I will be bringing in a lawyer to discuss all the different aspects about this in the next month! If you are a Skinny Dipping or Streaker Member of my Real Estate Club - you can join our Members Only Tele-conference call to hear lawyer Kim Taylor give us an overview of the do's & don't about creating partnerships on Wed, March 26th at 7:00pm.
