Investor · Lafayette, CA · Member since 2016 · 21 posts · 6 votes
I am interested in purchasing properties with small groups of families for student housing (their kids). Each property will be purchase and manage through a seperate LLC.
1. As the managing partner, will I need to qualify investors (accredited/sophisticated)?
2. Is there a minimum ownership (any) that I need to have in order to manage the LLC?
3. As a non-Realtor, am I able to sell shares in each LLC, as owners transition out?
While I am familiar with the Illinois Land Trust, that is not what I was referring to above. I was mainly pointing out that I believe the Series LLC structure, which functions much like the Delaware Statutory Trust, would be a great structure for the OP based on it's cost effectiveness and utility. The Series LLC can be formed in 12 states so far, but it is used commonly through all 50 states.
If you have any questions on these entities, shoot them my way. I may try hop on again some time this weekend to check the thread and respond if I can!
This is not legal advice, just my opinion as a real estate investor.
You'll have some issues due to self rental rules and keeping track of everything. Anything that has a personal component to it really shouldn't be put in an LLC at all.
First off, I would recommend the series LLC as opposed to a bunch of individual LLCs.. Using Traditional LLCs would get wildly expensive and complicated and you could accomplish the same thing with a Series LLC while saving money in the long run and simplifying the process.
1) no, not for the structure you are discussing. Accredited investors comes into play for different types of assets. 2) No, managers dont even have to members in some LLCs. 3) The transitioning member could sell their membership interests. The operating agreement would dictate how this would be done.
I will link a couple articles that can help clarify what I am talking about. First, The Series LLC is a great tool for investors working with multiple properties due to its ability to scale infinitely while still offering liability protection. Second, If you are working on more of a case-by-case situation you could look into this article on the venture specific LLC, which sounds like the concept you are referring to. It is a great tool, but if you plan on doing this with multiple properties I would still just stick with the Series LLC.
Feel free to tag or connect with me if you have more questions on the topic.
This isn't legal advice, this is just my opinion as a real estate investor.
While I am familiar with the Illinois Land Trust, that is not what I was referring to above. I was mainly pointing out that I believe the Series LLC structure, which functions much like the Delaware Statutory Trust, would be a great structure for the OP based on it's cost effectiveness and utility. The Series LLC can be formed in 12 states so far, but it is used commonly through all 50 states.
If you have any questions on these entities, shoot them my way. I may try hop on again some time this weekend to check the thread and respond if I can!
This is not legal advice, just my opinion as a real estate investor.
I don't think you can sell shares in LLC even if it is taxed as a C Corp, you have members LLC and you have to buy out their spots. You need a competent lawyer and CPA to draft something this complicated. Unless you can find the cash up front, good luck getting a loan as someone will end up guaranteeing it.
@Tom Makinen they aren't necessarily shares, but membership interests and you can sell them. It is very complicated as you mentioned and should probably include a CPA and lawyer
My attorney wrote up a Buy/Sell Agreement for the LLC and partners. Ours happens to state if a partner wants to sell, he must first offer to the LLC, then to the partners together, then to each partner separately if one declines, then to the public. We absolutely did not want a partner just selling out without the partners having control over that.