Growing a profitable buy and hold business.

[Ben Bakhshi]

We are steadily acquiring more and more rental properties and would like to continue growing. We are tapping out our conventional financing options and are looking for investors to help us grow.

I personally want to keep equity in all of my properties as this will provide me with steady income for many years.

Are any of you selling equity in your properties? ie. Buy 3 properties for $150,000 total with net cash flow of $24,000 a year. Place in LLC, sell equity at a 10 cap, value of LLC is $240,000. Sell 50% of the LLC at $120,000, and continue doing business. The income would not be guaranteed, but we could have a clause where the investor has premium shares that pay him first, after expenses and vacancies, and our half is paid after.

I think this is called Syndication.

I dont think it sounds too good to be true and is still fair for the investor. Afterall, we put in a considerable amount of time and effort and money to build the portfolio (not a real example).

Any other strategies out there? Better ones?

[Jon Holdman]

Yes, this is syndication. You would be doing a private placement. You need a good secutities attorney as the paperwork required is significant. You wouldn't not want to do this for $120K of investment. I've heard numbers in the $25,000 in legal fees to set this up. So, you would want to be looking at a much larger deal.

Also, you can ONLY recruit investors you already know and have an existing relationship with. Regulations prohibit any sort of advertising or investments by strangers.