All Forum Posts by: Jeff Greenberg

Sponsoring a syndicated deal is not a simple task, and the sponsor should be compensated. Signing on the loan is part of the risk you need to take on, preferably with non-recourse loan. I see, in your case it is not a non recourse loan. Even if we have a case where you feel that you deserve 60% of the cashflow and equity, what kind of return are you going to be giving your equity investors? If the deal can carry an enticing return for the investor and still give you 60% ownership, I say go for it.

The issue usually comes down to not how much you deserve for getting the deal, education, the loan, or anything else, but how much do I have to give up in order to get the deal done.

Remember, if the deal falls apart, the bank gets their money first and your investors could lose their money. So the investors are betting the house on you.

We do offer deals where we do receive a fee up front, cashflow after the investors get a preferred rate (SEC does not like the word guarantee) and equity at sale. We do not charge management or other fees. How much we receive should not be as much of a concern to the investor as long as we have a financial incentive to work the investment for them. As an investor I would be cautious of ones that are heavily front loaded, but don't have a problem with some upfront fee.

Good luck Kevin

Moving your 401k does not have to be a taxable event. Moving to a traditional IRA is not a taxable event. You would only pay taxes when there is a distribution. If the funds were moved to a Roth or a self directed Roth you would pay the taxes. The advantage of the Roth is, as the law currently stands you will never pay taxes on that money or teh gains from your investments of that money. There are other advantages to the Roth when you get to 79.5 years. There are many Self directed custodians that clarify any other questions you have. go online and look at equity trust, Pensco, etrust, and others

In the commercial arena we assign the contract to our LLC prior to closing. Since you haven't closed yet you may want see if the lender will accept an assignment of contract.

My understanding is you are risking losing the tax deferred benefit of the entire Ira as well as penalties back to the date distribution.

Warren,

We provide investment opportunities in MF properties in US emerging markets. We are always looking for equity partners interested in sharing in the cashflow and strong returns at sale. Contact us if you are interested discusing this further.

Mike,

It is my understanding that "an expectation of profit" is different then interest to be paid. However when the private lending goes beyond first and second postion loans it starts to move into SEC territory. Always consult an SEC attorney.

Good idea but more lead time and a better weekend might get a larger group. I also vote for SFV

I am not an SEC attorney but I have had long conversations with several of them. As part of my business investing in Multifamily properties we syndicate our deals.

There are several points I will comment on.

1. Solicitation of investors.
You can invite investors to come to an educational event, and talk about different aspects of RE investing. At this contact you cannot tell them about a particular deal, the type of returns they can expect, or your past performances. You can however allow them to fill out a form in which you can call them and establish a "relationship" with them. Email, snail mail, advertisement, internet contact is all solicitation, requiring you to form a "relationship" prior to talking about a deal or returns.

2. Private loans

If a group of people loan you money at a set interest rate, not based on the profit from the deal, it is not a security and not regulated by the SEC. You still have the problem of lien order or other collateral.

3. Number of investors.

Using Reg D exemption rule 505 (yes this is a security regulated by the SEC, but exempt from registration. Look it up for more info) You can have an unlimited number of accredited investors and 35 non-accredited. You are limited to raising a max of 5 mil per 12 month period.

Using Reg D exemption rule 506 You can have an unlimited number of accredited investors and 35 sophisticated investors. No raise limitation.

4. Number of pooled investors to be a security and regulated by the SEC.

If you have two people that go into a venture with the expectation of profit (not interest) and that profit depends solely on the performance of another, it is an security. If the investor does not have equal say so in the conduct of the business and his return is based on someone else's performance you are treading on SEC territory.

On all of these you may get away with not following the rules until someone is not happy with the return or money is lost. Then they turn you into the SEC and you have big fines and possible jail time.

Speak to an SEC attorney before you venture into profit sharing ventures.