How should I structure my new ownership entity w/ my investors?

[Ryan Auger]

Hey all,

I'm looking for some personal advice on how to structure a my deals. I already have the terms agreed upon with my investors, the next question is how I should structure it. My two deals are $1.1 and $1.2M right next to each other and I'm concerned that the huge cost of lawyers to form a syndication could eat into everyone's margins. I'm aware that JV partners are supposed to be somewhat active, but I'm not sure how that would be enforced. I've also met real estate investors who have simply used LLC's and defined the terms in the operating agreement.

What are the pros and cons when considering syndication vs LLC's vs JVs?

Thanks!

[AJ Shepard]

I’ve always found that it is a lot cheaper/more economic to have a lawyer review paperwork that you have come up with than it is to have them come up with anything.  I’m not a lawyer and can’t give legal advice.  But you might think of preparing all the paperwork yourself (maybe both scenarios) and asking for a quote from the lawyers on what it would take to clean it up for the deal?  I would also confirm before talking to the lawyers that the structure is supported and accepted by the bank that you are using for debt.  No sense in creating something that can’t get debt anyway…. Hope this helps.