Large Apartment Complex Purchase

[Luke Easley]

I have 3 years experience managing many single family homes and apartment complexes. I have personally flipped 1 house and own an Airbnb/short term rental arbitrage business with 6 luxury apartments.

I also run a local real estate investors meet up with monthly attendance of 100+ people.

I am looking at buying an 83 unit apartment complex. It’s only a few years old, very nice complex, but has potential value add with a small empty lot next to it that could be garage spaces or storage space for tenants.

There is a large market here for furnished rentals, so we would turn several apartments into furnished to increase NOI. And maybe run some as short term rentals to significantly increase income from some of the units.

Deal Details:

Asking: $13,695,000

NOI: $872,180

Cap Rate: 6.37%

Occupancy: 96%

Tenant Class: A

My main question is, how should I structure a deal like this if I have multiple partners? I likely will have little to no money in the deal, but would be the managing partner and doing most of the leg work to make the deal happen. I will have 4-5 partners to come up with a down payment of 2.5-3m.

1. Should we setup an LLC with each of us as members of that LLC?

2. Is it common for the managing/working partner to get a larger share than the others? Or Should we all split evenly?

3. Will the bank have to run each partner’s credit?

4. Would the loan be in the LLCs name? Is that how it usually works?

These are questions, my partners and I would like to know as we have not done a deal this large altogether before.

Thank you for any inputs!!