Co-Investing in Real Estate

[Account Closed]

How do people invest with each other? Do they use operating agreements, joint ownership, both? What type of professional do you use to officiate this? Just a lawyer? An agent? Both? How are these typically structured? Does anyone have any examples that they could post?

What are the most common forms of creative financing?

Would more people be willing to invest in multifamily properties if they could invest with other trustworthy BP members and pool capital/lower risk? Would people be willing to do this with a custom operating agreement in place? This way, more people could easily and with transparency tap into economies of scale.

[Taylor L.]

JVs require all parties to have an active role in the operation of the company. Syndication is required when you start bringing on passive investors, because you are selling a security. Most multifamily syndications fall under Reg D Sec 506(b) or 506(c).

Definitely talk to lawyers before setting these things up. The disclosures, operating agreements, and so forth in both JV agreements and Syndications are there to protect various parties should things go sideways.

My background is syndications, so I can talk more about that...

Syndications typically use LLCs, with the managers owning "B" ownership units and investors owning "A" ownership units. "B"s will be vested with all management responsibilities they can legally have. The equity ownership is typically split 70/30, 80/20, or up to 90/10 investors/sponsors.

This is a really complicated topic. I am not a lawyer and I do not play one on the internet