Need advice on setting up a JV where I manage the funds/assets

[Nayt Grochowski]

I am working with a small group of investors and we are putting our funds together to purchase properties that we will sell with seller financing to generate cash flow. The plan is that my LLC will be managing the assets, basically handling the acquisition, marketing, sale and collection/distribution of cash flow. Plus when we sell a note, or get refinanced out, I will take those proceeds and get more properties back in to keep generating cash flow. This is a long term investment/hold strategy we are building up as a group. I plan on taking a fee as a % of the cash flow disbursements for doing the work, along with putting my own capital in for the initial funding.

I would also like to repeat this with more people and create new partnerships down the road. Want to make sure I am setting up the JV correctly between my LLC and the other people/LLCs and that it is easily replicable. Each partnership will be its own group, the assets of each would be completely separate from each other. Once a group is formed and each person has their % of the relationship, it's locked in.

Some of the key points for the partnerships to still be worked out:

• How to exit the partnership – plan is to put a value on the assets/cash we have at that time and allow the other members of the JV to buy out the partner. And if current partners don't have capital to buy out, open it up for a new partner to replace them. Anyone have other ideas/issues with this thought?
• Taxes on sold properties that we then reinvest into more – Do we take the tax hit, or is the purchase of additional properties counted as a business expense, or if not is a 1031 possible. We could have this happen multiple times a year too, so looking for something not too complex.

Obviously the JV has much more in the agreement, but these are the main areas I am not sure about.

Has anyone set up JV groups like this and have experience and tips you would be up for sharing?