Seeking to build an Equity Ticket for Spec Builds in Atlanta

[Ian Porter]

Looking for advice on how to structure a JV or partnership on a couple spec builds in the Atlanta Area. I have funding lined up for at least 80% LTC of the project but I want to raise an equity ticket. I've always self funded so I'm not familiar with how these deals are typically structured.

[Tanner Sherman]

If you plan to raise capital, always start by consulting an SEC attorney, it's not an area you want to mess around with. The most advantageous way to raise capital for you would be debt. You raise money at a fixed interest rate, when the investor's get their return any profits on top are yours, and then when the investor get's their initial investment back it's all yours. 

Development is a speculative investment, and limited partners typically will want a much higher upside potential, so you might be better off starting a fund where you agree to share the profits with the investors even after they recover their initial investment. 

If you are going to be doing all the legwork, guaranteeing notes and have the expertise to execute and all you need is capital, one of the first two options might be your best bet. If you need to partner with experience, net worth, or legwork, a JV might make more sense. I wouldn't cheap out on this part and hire an attorney to help set up a bulletproof partnership.