Must haves prior to starting

[Michael Leland]

Greetings BP!

I'm a high earner in healthcare but want to get to a future where I can stop trading my time for money and live actively pursuing "passive" cash flow. My goal is to invest in CRE and hopefully scale to larger retail / office / industrial properties. I'm not ruling out the other CRE asset classes.

I've been long researching and educating myself about structuring deals, adding value, etc...

My question is, coming from a highly litigious setting, what are the minimum legal/business structures I should have in place prior to joining in as an LP in deals and eventually as a GP with smaller deals prior to scaling in the future? I already have a CPA and I'm looking at options such as setting up with anonymity in mind with a "parent" LLC in Delaware, for example, which would contain other LLC's/ land trusts in Texas / etc where I will be involved in deals.

I'm really feeling like I'm to the point where I should get involved in deals as I'll never feel "done" with research. Coming from the perfection mindset I'm consciously shifting to avoid analysis paralysis. I realize I need to do my due diligence but need to reach out to others and fail forward along the path with learning opportunities.

I would appreciate your input!

Thank you so much!

[Scott E.]

You're on the right track, you're thinking about the right things.

Since you are looking to focus on commercial, specifically retail/office/industrial, I recommend you spend a TON of time on LoopNet over the next couple of months looking at retail/office/industrial deals. 

You should look at every single property available for sale in your sub market. Study the offering memorandums. Get familiar with how the cap rates are calculated. Get an understanding as to how leases are written (NNN, NN, full service, etc). Go drive by some of the properties that intrigue you to get a better feel for EXACTLY what asset class and region you would like to buy.

Once you start to zero in, start connecting with a couple commercial real estate brokers. You will find at least 1 who will represent you with YOUR best interests in mind (remember brokers are salespeople, so some of them are just looking to make a sale).

After all that, it's time to spend a bunch of time working with your broker over the following few months, making offers, and eventually doing a deal.