Do I have the proper understand of Master Lease Agreements, and Holding Cost When it Comes to Offering my Property for Sale ?

[Alex Hamilton]

I'm at the point of closing a real estate transaction with 4 buyers forming an LLC to purchase, some apartments we are converting to sell as Condominiums. To be fair, I have eight people wanting to move forward, and two with questions that trouble me. I just wanted to know if anyone of you BPers could tell be where I went wrong in explaining the deal to the two people I'm losing because, I plan to repeat the deal structure on other properties. The Transaction went like this.

1. Eight residential units purchased at $300,000 with 20% down ($60,000) on a balance of $240,000. There is a 25% ownership by four people in a LLC Holding company paying $15,000 each to cover down payment and said Share in the development.

2.  The monthly income from the property is $5,200 at 100% occupancy which my company is paying the  Holding Company to protect them against vacancies while I arrange sales of the units for a projected $480,000 or more if possible.  This is the "Master Lease".

3.  I have a Community Housing Development Organization that present income is between $10,000 to $12,0000 per month without this transaction, we only Net $5000 to $6000 per month.  We are asking 20% of the monthly income to help pay all "Holding Cost", with our organization covering a clear operational deficit to allow owners to net at lease $900 per month each ($3,600 per month) to enhance their ROI

Problem is these two people don't feel my company will be able to make good on this offer, paying expenses, and eventually letting them exit deal with at least  about $60,000 to $90,000 each after sale of the units, which is not counting $900 per month they enjoy while we do all the work in moving low to moderate Renters from Rent to Home ownership, which is the Mission of the Non Profit Community Housing Organization.