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Updated almost 10 years ago, 02/18/2015

User Stats

916
Posts
190
Votes
Chaz Reid
  • Investor
  • Fayetteville, NC
190
Votes |
916
Posts

$1M+ deal, without any personal money invest?

Chaz Reid
  • Investor
  • Fayetteville, NC
Posted

Random question:

What is it called when someone pieces together a deal on a big apartment complex, gets investors together to purchase it, and they get a share of profits without investing any money? 

Is there even a name for that? 

It might be simple, I might know it, but right now...

(-_-)... I'm drawing a blank

User Stats

23,418
Posts
13,507
Votes
Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
13,507
Votes |
23,418
Posts
Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
Replied

Syndication.

User Stats

916
Posts
190
Votes
Chaz Reid
  • Investor
  • Fayetteville, NC
190
Votes |
916
Posts
Chaz Reid
  • Investor
  • Fayetteville, NC
Replied

Thank you @Wayne Brooks . 

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User Stats

23
Posts
15
Votes
Tim Shoultz
  • Real Estate Investor
  • Remond, WA
15
Votes |
23
Posts
Tim Shoultz
  • Real Estate Investor
  • Remond, WA
Replied

Syndication or a Fund, either way can work.  It is very hard to get people to invest with you if you put nothing in, especially when you are starting out.  I've put as little as $50K into a deal, but that was after having a very successful track record for a number of years and developing a fairly large portfolio. 

User Stats

11
Posts
2
Votes
Nathaniel Parr
  • Real Estate Attorney
  • Anchorage, AK
2
Votes |
11
Posts
Nathaniel Parr
  • Real Estate Attorney
  • Anchorage, AK
Replied

What you're describing is real estate syndication. When you are selling shares of interest in real property, those interests are securities and you must observe the laws and regulations relating to securities. Syndications can be done as private offerings, in accordance with SEC regulations. 

Generally there will be one person or entity (the syndicator) who is running the operation and there will be passive investors with capital. There are multiple ways to profit as the syndicator without investing any money of your own. You take a fee, either as a flat fee or a percentage of the total transaction; you can charge an ongoing management fee; and, you can receive a portion of any surplus cash flow remaining after you've paid your investors what you promised them in return, and receive some amount of equity in the property as well. 

User Stats

916
Posts
190
Votes
Chaz Reid
  • Investor
  • Fayetteville, NC
190
Votes |
916
Posts
Chaz Reid
  • Investor
  • Fayetteville, NC
Replied

Thank you @Tim Shoultz  and @Nathaniel Parr .