How are partnerships created on a Construction Loan?

[Jordan L.]

Living in an apartment, I was always so curious who owns this 300 unit building, so I went snooping around the net. The currents owners form a partnership/LLC to get a construction loan for this property 15 years ago. The loan is for 40 years, different stipulations. Too lengthy to put here. What’s fascinating was each company has their own entity and different percentage on the property. What I wanted to know is when you see these large skyscrapers and large buildings being built around your city/town, is this what usually happens, a couple groups of organizations get together and buy a large piece of property. It’s amazing what you will find on the internet. How does someone qualify for such a large loan? At the time the loan was for approx 12 million and they all contributed there portions. I would like to know has anyone on bigger pockets been apart such a massive joint venture/partnership purchasing a large building. I would love one day to be a partner in such a business deal. Taking baby steps now : )However, not sure what the expenses are but I know they made a profit. The property management also was a partner on the loan. Can someone give me the details on how Construction Loans work. I am just trying to gain knowledge for the future. Thanks

[Bill Gulley]

Jordan, there are a thousand ways or combinations to approach such projects, often under syndication, with tax credits granted, can be in a REIT or other structures, sole owners, affiliates and subsidiaries may be involved. I've been in rather convoluted projects in non-residential commercial properties. If you're interested in learning on a grader scale there are commercial sites and publications. Non-profits specialize in tax credit projects, one is SOHO in Cali, I know them well, HUD and the NAHRO (National ***. of Housing and Real Estate Officials) has information on larger projects, new construction and rehabs. The best way to get involved is to start out with a developer. My entry was from financing commercial projects and business acquisitions as well as through NAHRO with residential. You'll also find that such projects are highly political, consider the NJ project in the news with a mayor and governor having issues surrounding a 15M mixed use project. Such are beyond the scope of BP. Look too at the prospectus for REITs to find syndicators and principles as well as proposed projects. That will be the outside looking in but you can see who the players are. :)