All Forum Posts by: Allen Lemay

Hello Bigger Pockets - 

This week I'm meeting with my attorney to discuss options for creating a real estate fund.  The aim with this post is see if any existing fund managers would be open to a discussion.  I've done some research and would be curious to hear different points-of-view on the topic.  High-level overview of what I'm thinking.  

Type: 506(b) Reg D: This seemed to make a lot of sense due to the barriers of entry and SEC filings  

Series 65: Currently, I do not hold my Series 65 and cannot charge management fees.  Are there other creative LEGAL ways to do this?  

Questions: What does the structure of your fund look like? How does your fund make money (acquisition fees, management fees, equity splits, etc)?  What is the make up of your team?  Do you work with private investors or institutional investors?  Do you leverage a custodian?  What are some things you wish you knew before starting your fund (positives & negatives)?  There are several other questions but this should give you a frame of reference where my head is at.  

Appreciate any and all feedback. 

Allen LeMay 

Hi - 

I'm hoping you can help me out.  For those of you who are in a partnership and syndicating multi-family properties, I'd like to pick your brain.  How do you structure the ownership interest for the different general partners (GPs) in the deal?  Do you split everything down the middle depending on the number of GPs that are involved (e.g. 2 GPs each get 50% ownership stake)?  Or do you carve out the % of interest based on the value each GP brought to the deal (e.g. Capital raise equates to 20% of GP ownership, Deal sourcing equates to 20% of GP Ownership, Asset Management 25%, Loan Guarantor 5%, etc).  Curious to see how this is structured and would love to see examples if you're willing to share. 

Allen 

Hi Bigger Pockets - 

I'm hoping you can help me out. Recently, a business partner and I finalized our LLC in the state of Minnesota. We structured it in a way that the parent company is a holding company. We have the operating company (property management) we use as rent collection / payment of expenses for the business. Each property will be set up as an individual LLC under the holding company. My understanding is this is a pretty common structure.

In the state of MN there is a $135 filing fee for each LLC created. To keep continuity and ensure each LLC was filed correctly we thought it would be best for our attorneys to setup each LLC. They provided a quote of $2,800 to set up 10 additional LLCs (1500 labor & 1300 filing fees). We understand there is now way around the filing fees but curious how others have set up LLC's and the complexity of it and ensuring they were all part of your holding company.

Appreciate any and all guidance.   

Hi - 

I'm looking to network with wholesalers in the Twin Cities. My business partner and I recently secured a line of credit so we can purchase with cash. We are interested in single family & multi-family properties. Opportunities we are exploring are are single family flips - but realize the Twin Cities market is pretty pinched - so good deals are tough to come by. Our preference would be value add multifamily properties to BRRRR. We are serious but patient buyers. Please feel free to send me a message on Bigger Pockets if you would like to connect.

Thank you. 

Allen    

@Patrick Strain - Very helpful response.  Really appreciate you taking the time to write that response. 

@Tim Swierczek - Thanks for the response, very helpful.  I did confirm they have a license through the state in MN.  

Bigger Pockets - 

I'm hoping you can help me out.  My wife and I recently finished renovating a duplex in Minneapolis and are now stuck trying to find renters at the best time of the year.  :-) We are being approached by individuals who lead group homes for disabled adults.  They informed me that the individuals living in the unit would be unrelated and have nursing supervision 24 hours a day.  The property is Zoned R2B (Two Family District - Low Density) and understand the city will allow Housing with Services to occupy the unit.

I'm extremely skeptical of this because the people approaching me don't have a website, are not providing information about their operation, and I know nothing about group homes.

Has anyone had experience with Group Homes (Housing with Services).  Any guidance for for us on how to approach?

Appreciate any and all help.

Allen 

Thank you to everyone who has responded.  I'm seeing a lot of consistency in the responses.  

1.) Vet out the sponsor (probably the most consistent response)

2.) Have a solid underwriting review and remain conservative

3.) Know the market you will be investing 

4.) Understand the terms you are signing on to

I'm drawing a lot of parallels in syndicating multi-family and my existing role as a software sales rep for Workday. The transactions are built on Trust, Credibility, Solid ROI, Require patience, and an ability to deliver on commitment. I know there are other complications that come into play with syndicating (due diligence, renters, renovations, etc) but similar fundamentals.

I anticipate stepping into this syndicating world in 2019 with a partner and mentor who has done several syndications (I'm sure several of you know this individual).  Our aim is to start small and learn.  I've learned in my career mistakes are going to happen - no one is perfect.  A person can minimize mistakes by properly preparing, paying attention to details, and rehearsing every possible worst case scenario (like you do with attorneys in a negotiation), and asking for help.  

I really appreciate the feedback from everyone on this post.  This is a pretty amazing community of people.  What I like most about it is, you don't see people blowing out someone else's candle to make their's shine brighter.          

Bigger Pockets Community - 

Thank you for responding to this post.  I've dabbled around with bigger pockets in the last 6-months but not frequently.  However, the power of multiple minds coming together to share their experience / knowledge is incredible.  Big THANK YOU to everyone who has taken the time to respond.  

@Account Closed

Bigger Pockets - 

I've listened to several BP Podcast about multi-family syndications and the success people are having.  They almost make it seem like it is a bullet prof investment strategy.  However, I want to hear the other side of the story and why syndications fail.  If you've been through a "Syndication Gone Wrong" I'd love to hear from you.  Why did it fail?  Please share specifics.  Person? Location? Property did not appreciate as much as intended? To much renter turnover? Market competition? 

Really appreciate anyone's willingness to share their stories with me. 

Happy Holiday's. 

Allen 

@Scott S. - Thanks Scott.  Would be interested in learning about any syndicating opportunities in Dallas if there is an opportunity.