Real Estate Syndication, Partners, and What to do about Capital

[Matthew Irish-Jones]

Hi,

My name is Matt, I have been involved with Real Estate investing for 6 years. I am a 25% owner of a LLC with over $1,000,000 worth of property. I also own my own double in the city of Buffalo that I will be doing a 1031 Exchange on this summer and moving into 8-10 other properties in an up an coming party of town.

I have several friends and family members with no Real Estate investing experience that want to invest with me.  I am not sure what the best way to do this is.  I have been looking up rules and regulations on starting a Real Estate syndicate.  I am not sure what the best course of action is, I am also considering starting a separate LLC and taking on a partner for that specific LLC.  However, since I have multiple people interested I would like to find a way to have them invest in my business, so I am not starting separate LLC's for every deal with every investor.  

Any advice on how to handle friends and family that want to invest their money with me or my business would be appreciated.

[Kim Lisa Taylor]

Hi Nathan, Great info from Dave on the 1031 issues. That's clearly the simplest way to go with your 1031 property. You can have others invest with you in a TIC as he suggests, but there are some significant differences in what you can earn as a member of a TIC versus what you can earn as a Syndicator. Generally, your TIC interests will be commensurate with your cash (or 1031) investment and there are limitations on what you can earn for putting together the TIC and acting as its asset manager.

Conversely, there are about 12 ways you can earn money as a Syndicator by contributing sweat equity, in addition to making a return on any cash investment you may (or may not) choose to make. It's best for you to have a consultation with a real estate syndication attorney who can help you figure out the legal structure and securities exemption that most closely matches your long-term goals, based on the size and type of properties you will acquire, their location, and the financial qualifications of your investors.