How to Structure a large Investment

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The first step is to learn how to raise and organize money, which you're doing. Identify potential investors and try to get soft commitments with a marketing package. Adjust based on feedback.The second step is to organize yourself legally with an operating agreement, offering circular, and subscription agreement. A competent securities attorney can help you with this and you'll want someone to help you organize the deal from a deal/marketing standpoint so the lawyer doesn't design it to be unsalable. Minimums have tradeoffs and marketing features. With Reg. D, Rule 506(c) you can have thousands of investors now, but do you want to organize all of that on your own? Having software helps and having a marketing system designed alongside the software allows you to attract investors and manage them through to a close. It also helps with managing the deal after you have it underway along with your investor relations function. Partnering with a RIA firm also helps.Regarding what you offer there are many, many ways to do it. Doing a preferred return and some split is common, sometimes with a match on the split. The overall cost of equity capital will be driven by the product type and the track record of the sponsor. Access to capital, the cost of capital, and your control of your deals will all get better as your track record matures.

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This could be accomplished with a few partners in a joint venture however it sounds like you aiming at real estate syndication. If you need good book recommendations, there are a plenty however "Raising Private Capital" by Hunter Thompson and "Best Ever Syndication Book" by Joe Fairless are really all you need. That being said, DM and I can share a high level overview of syndication, 12 step process in a blog article (can't link because It will get flagged as promotion). Either way! When it comes to syndication, it starts with education and deciding on what role you want to play, then building the support team to accomplish the end goal. The deal and documents can be structured any which way. There is no one way fits all for the passive investor or syndication group. So understanding what is appealing to your network and what is worthwhile for you is good first step. Hope that helps.

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Thank you @Chris Levarek I appreciate the feedback and I will check out those books and the link you sent. I understand there is a lot to learn and getting comfortable with networking with the right people. @AJ Shepard Thank you for the feed back that is an interesting strategy to walk through an entire deal as if to close but base it on a deal that has just closed. I will look into that and I am sure I will learn a lot in the process. Greatly appreciated.

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@Dakota CoburnAs you learn more about syndication and are taking the next steps to start applying the concept and turning it into reality, there was one thing that helped us in our journey that I like to talk about.Model a project, or come up with a sample. This sounds a lot easier than it is. But really invest your time, money and effort into creating a deal that will never get done. Find a property that recently sold and mock it up. Get all the agreements, all the marketing materials, everything you would have to do if you had a deal under contract and we’re going to raise money and talk to investors about and ultimately close on. The reason for this advice, is that when you do get a deal under contract, you want to be focusing on raising money, talking to people about the deal. You’ll need to spend your time on the inspection reports, the lending documents and requests. You don’t want to be focused on how to create the next thing, how to put together an operating agreement, how to do all the things that go into closing a deal. Yes, it’s going to be an investment, yes, it’s going to cost money and lawyers fees. But once you have all this “mocked” up, you’ll have a clear path to talk to someone else on the vision of what will happen. You’ll have examples and data and ultimately someone else looking at it will be more comfortable investing.

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@Charles Carillo thank you. I could not think of the term when I was writing this post. I read through a ton of threads after posting this and learned a lot.

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@Bryan Hancock thank you. I greatly appreciate the feedback and advice.

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@Dakota CoburnWhat you are describing is syndication as a general partner. I would start researching this strategy and it will answer most of your questions. Usually, investors start with smaller real estate projects and build their experience before raising money and closing on larger properties through syndication.