-
-
-
I have an investor who would like to invest with us, but have me do most of the work. We are putting up the same $$ but I get 60% of the profits/shares. Enough capital for 2-3 performing notes with the primary goal holding long back-ends of partials. Investor is an airline pilot and will be bringing pilot partial investors to the deal. I will also make some vig on each transaction (Titanium vs non-member pricing). Profits will stay in the LLC for re-investment until mutually agreeable.
I am the manager with full control, the investor is actually two SDIRA accounts. My LLC is the member on my behalf. I have set up a new LLC with proportionate shares. I have done a pretty thorough job educating the client on the note space.
We have an operating agreement outlining strategy, exit options, additional capital investments/shares, general investments, etc. Anything else I should clarify?
-
I have a group of investors who are looking for a fixed return with performing notes. These investors will be a mix of cash & SDIRAs/ personal & business entities. I want to do all the work and make this a truly passive investment for my investors. Mainly, I want to have an LLC (or even a fund) that’ll allow me to offer a preferred return of 6-8% and then perhaps do a waterfall approach for anything over. I guess that’s not exactly a JV, but more of structuring a deal, so I’m not sure a JV-type LLC would make sense.
-
Fred,
I’m not sure of your operating agreement. However why would you “settle” for that split? Maybe … if he puts ALL the money in your 60% would seem fair. Have you undervalued your time, expertise and educational investment? Let him know that he is Passive. Those investment return are always less than that of Active investors.
Money is everywhere. Be strong.
He needs you far more than you need him.
Bob B
-
I agree. Perhaps a tiered waterfall structure would be more fair. Your investor gets a preferred returned while you keep more of the profits.
-
My brother is interested in investing with me. I have been educating him about notes, so I think he may want to have some say in the decision making, but expecting me to be the expert (which I should be). I am doing non-performing only at this point.
I was excited to hear that Note School was working on this, because I kept wondering how to handle my situation. My brother is not planning to use retirement money (at least not at first). I’m thinking that he can help with the due dilegence, once I train him on it. However, even then I am the one with the greater knowledge, and the investment in the training. Any thoughts on what would be a fair way to split the profits?
-
My idea for a partnering agreement would look something like this:
1) Borrow private money to use a operating capital from a handful of investors with SD-IRAs. Their reward would be something like 7% and 2 points upfront like a hard money arrangement.
2) Find and acquire a few PERFORMING assets at using the loans above only borrowed when dollars are ready to be deployed.
3) Flip note at Par and keep the spread improved lifestyle today of sell front-end partial and keep to back end for wealth building
4) Document how to handle loan if it has early payoff or if Performing note becomes Non-Performing
5) Neither investor ( hard money or note buyer) has managerial control.
How do you paper a 3 party partnering like this?
Kevin Toliver
-
We will be participating with another investor by creating a multi member LLC. Two couples who are both noteschool mentor students. Each providing equal effort and money.
Thanks, Mick and Janet
-
I have already done a JV agreement with the following terms:
My LLC and other Roth IRA. IRA puts up the purchase price and gets 40% of margin.
LLC works the deal and provides all misc expenses and gets 60% of margin.
Keith W.
-
-
Last challenge was to create an entity to allow five small funders to participate in a performing note purchase secured by rental real estate. One funder was a traditional IRA housed by Equity Trust, two were Roths housed by Quest, and two were small non-IRA trusts. Created a personal property trust with EIN and checking account,
Serviced by a professional servicer after the purchase. Managed by the mentor student who received the brokerage fee.
Seeking a vehicle model which exists only for one deal to isolate responsibility, return, and for asset protection.
-
I would like to partner up with another mentoring student who has investors wanting their 10% return (or whatever it may be). In the scenarios we came up with I keep coming back to SEC concerns because of having the other student (less experienced than me) in the mix with me and his investor. I don’t know the best way to structure this type of arrangement to include all three of us. Whether we purchase NPL’s or strictly a private lending type of situation, I am not sure how I can structure this with three of us in the mix, legally and with protections for all.
-
Question??
Is this deal a Joint Venture/ LLC or a Private Fund? I would be most interested in an LLC with a great operating agreement that would secure the passive investors investment by the performing notes. It might be helpful to have an option to split remaining profits upon the close out of the LLC.
Hope this is a clear enough request.
Thanks
Ralph
-
I am also involved in a 9 member JV consisting of IRA’s and LLC’s. Each entity member contributed what they wanted to and all income and expenses are added/divied out according to that initial percentage invested by each entity. Each member took a piece of the work pie (some on the DD end, some working the legal aspects, some doing the bookkeeping, etc.). We drew up our own JV contract. It’s been 2+ years in the making and we’ve gotten our principal back and still have half the notes still to be completely worked out. What would have been the best approach to structure this JV? What pitfalls do we need to consider for the next time we consider doing this type of arrangement. Everything is working fine thus far, but I know there could be dangers lurking.
-
Ralph, I’m not sure if you were addressing your question to me or not…. – Barb
-
I was actually presenting (in the first scenario) a potential scenario with another mentoring student who I was already in talks with and had his own investor(s) lined up. It sort of fell by the wayside, but I think I can rejuvenate the conversation with the right answer / structure. One of the stumbling blocks we had was that the investor wanted his 10% return immediately, which made it hard to buy NPL’s and wait for the returns to filter in. Plus if we had to satisfy his return with PL’s there wasn’t much left-over for the NPL’s…..
-
Another scenario for consideration for JV or LLC on NPL
a passive investor funds the deal, we (note school students) work it out on a loan mod, work out person negotiates 3 – 4 months payments to do loan mod. workout person keeps the money as a fee, then monthly payments are split 50/50. after 12 months sell the re performing note. the investor is paid back the amount they invested and profits are spilt 50/50 or could this be structured to sell a partial to make the investor whole with some profit and the note school student hold the remainder of the note?
-
I am interested in a document that will allow my Maryland LLC to borrow money from a single California investor via a promissory note and pledge or assign a note or a group of notes as security for the loan. This specific investor does not want to buy partials or be on title for any assets. If a note or group of notes is/are used as collateral for the loan, does anything need to be recorded?
-
Hi All,
We have just found our FIRST Passive Partial Investor!!!!!!He has very little note experience but can bring the funding to the deal & also has a SD Roth IRA. He prefers a 5 yr. partial so we are looking for a PN to accomplish this.
Depending upon the availability of PN’S to continue with the ‘partial” strategy which we would BOTH prefer we may have to look to NPL which he would fund & we would do the Mod, DIL, or FC as needed & strategy would then be to bring to re-performing & ? sell partial/seller finance to consumer?
We both have entities but expect that we would need to form an LLC/JV spelling out all responsibilities, income splits, separation procedure (if req.) etc. etc.
We have never done any of this so need much guidance to be both legal & compliant. All advice gratefully accepted!!
-
Keith Warrington, I would like to talk with you about how you structure your IRA/LLC deals. From what I read above, I may want to do this. It seems that you are combining your IRA funds with your LLC (cash) funds, and “legally benefiting” from your IRA funds. I thought I had your card, but can’t find it. Could you please email me at bgcapfund@gmail.com?
-
I am working with two other students on identifying properties for which we could use the TFA. We want to form a joint venture when working together on these properties. Our initial thinking is to keep it fairly simple and straightforward. Out thinking is that one of our entities (we each have an LLC) would purchase the property. We would then split all costs and profits 50/50. Please contact me at ellen@parkinvestmentgroup.com with any feedback on how to set-up this JV. Thank you!
-
Hey All,
I am collecting all this information and sending it up the ladder today. Thanks for your patience on this and a big thank you to everyone who posted!
-
You must be logged in to reply to this topic.