Investing in multi-family apartment as joint venture, advice on how to structure

[Nikki Cepeda]

Thus far, we've been investors purchasing our own properties but we have an opportunity in that a family member is open to selling their 30-unit apartment building. It's our largest deal yet and to be able to pay in we may need to sell 3 of our rental properties to do so. The other factor is that this is a family deal being split among siblings. 

Our contribution makes us the primary shareholder but as this is a multiple-partner deal which we don't have much experience with, we're very open to any and all advice. What we've heard to this point is that mixing real estate and family is often not a great idea unless the agreement in place is very very clear and ideally one person still retains 100% control while the others are passive investors only. 

Approaching it like syndication was also mentioned with us as the GP and others as LP. Is there advice or past experiences with JVing a deal and how best to structure the agreement?

[E. C. "Stony" Stonebraker]

@Nikki Cepeda, please retain an experienced attorney to advise you...I'm sure that's your plan, but I want to emphasize that.  

While many of us have experience with JVs and syndications and can offer advice, we don't know enough about your situation or the law to offer legal advice.

Having said that, a 30 unit multifamily is a business and should be treated as such. So retaining an attorney who can develop an arrangement for you is important. 

As for family, it might be best to buy out your siblings, so you don't develop family issues with the property.  You can arrange terms for your buyout, again, with the help of an attorney.

A JV requires all JV partners to be active managers of the property. From your brief description of your situation, this doesn't sound like it fits.

Your attorney doesn't have to be local to you or your property.  The most important criteria is the attorney's experience in structuring commercial deals.  You don't want a local transactional attorney to works mostly in local single family residential deals.

For examples of attorneys, see Kim Lisa Taylor (SyndicationAttorneys.com), Dugan Kelley (KelleyClarke.com), or Mauricio Rauld (PremierLawGroup.net).  They all can give you lots of good advice on how to proceed before you retain someone.