How To Structure A Real Estate Investment Group


Define Roles And Expectations

Real Estate Investment Structure 3 Tier

Before entering into a partnership, its in your best interest to identify what will be expected of each individual and the roles they will inherently fill. In doing so, you will mitigate the risk of running into significant problems down the road. Its worth noting that the more clearly you can define each partners respective role, the better. There should be literally no discrepancies as to what role you will play over the course of your involvement in the business. Who is going to manage the finances? Who will be responsible for marketing? Which of you will be tasked with negotiating at the closing table? Partners will need to know who is doing what well before the situation ever arises. That way, you can set reasonable expectations each partner will be held to.

How To Structure A Joint Venture Real Estate Deal

Joint Ventures

Our first joint venture real estate deal was the very first property Dave and I bought together in 2001. We were dating at the time and pooled our resources to do the first two deals. I had excellent credit, $16,000 in savings and zero debt. Dave didnt have any savings but he did have money in RRSPs, which he cashed out to invest in our properties. We both had good jobs at that time, although I was leaving mine to do my MBA.

We moved into one of the properties so we could put less money down and still qualify for good financing.

After that, we were out of cash and I was now a student in Toronto so we had to find other ways to get deals done that didnt require cash or bank financing.

Despite the cash challenge, we still managed to add another four properties to our portfolio in 2002 and 2003. Two of those properties were our first external from us and we did a joint venture with a friend. Dave also made some money off an assignment deal finding a great deal and assigning it to someone else for a fee .

Since then weve largely relied on other peoples money to fund our deals.

During 2010 2012 when we were aggressively growing our portfolio and averaging one new house almost every month, the majority of our purchases were joint ventures.

The majority of these deals were structured so that we were the managing partners and our money partners came to the table with financing capability and the initial investment capital required .

Starting A Real Estate Investment Llc Or Lp

Two other common business entities for real estate investors is the limited liability company or limited partnership .

The LLC can be formed by either an individual or multiple people .

The LP, by definition, requires more than one person.

LLCs and LPs provide some legal protection to their individual owners as liability for accidents, finances, etc. lies with the LLC or the LP . Both LLCs and LPs can be structured to be pass-through entities for tax purposes. What does this mean? A pass-through structured entity means there is no taxation to the business all income, deductions, etc. are passed to the individual partners.

It should be noted that not all members of an LP are shielded from liability. In most cases, LPs have both a general partner and limited partners. The limited partners can invest in the business and share profits and losses, but they do not actively engage in the management of the business itself. The general partner is responsible for all management but remains liable for the obligations of the LP.

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Real Estate Partnership Entities

A real estate partnership can be formed through a variety of pass-through entities. Each of these real estate partnership formations provides dual benefits to investors. The 3 most common entity partnerships are:

  • LLC or Limited Liability Company

  • LLP or Limited Liability Partnership

  • S-Corporation

Taxation is eliminated on a corporate and personal level since income or losses are passed through to each investor for reporting on a personal tax return. These entities also provide legal protection from claims against other business or personal assets belonging to each investor that are not part of the partnership.

What Should I Look For In A Real Estate Investment Group

Real Estate Trust Overview

Look for a real estate investment group with a mission-aligned to your goals. Review the history of the group, as well as their performance. Not every venture must be successful, but there should be enough successes to make it an attractive option. Also, ensure that the decision-makers are knowledgeable, experienced, and skilled.

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Forming A Real Estate Fund Capital Fund Law Group

The most basic structure is a single-asset acquisition vehicle. This is a company formed to hold a single real estate investment property. Next is the private

Raise the capital you need for investing in real estate by establishing a how you plan to operate the real estate investment company and use the funds.

Sep 16, 2021 Learn how to create a real estate investment partnership and how to determine if this type of structure is right for your investment goals.

Forming a private real estate fund provides a means for the successful real estate developer to access a dedicated pool of capital to fund new investment deals

New real estate investors need to set up their rental property business in a way that protects them while still being scalable to their investment goals.

Apr 16, 2021 On the opposite end of the spectrum are Real Estate Investment Trusts why a fund is such an attractive structure for so many companies,

Real Estate Investment Structures. Published on Nov. 11, 2011. 1. Sole-Ownership 2. Tenant-In-Common Ownership 3. Delaware Statutory Trust Ownership

Learn how real estate investors structure deals and operate. firms include real estate investment trusts , private equity firms, hedge funds,

Summary: Many real estate investors use limited liability companies to house their investment properties. This post covers the reasons you should

Team Leader Real Estate Team Model Services & Expectations

Since this real estate team model is based on high-level customer service to the client, you will provide full-time administration to do file management and to respond to customers, while the rest of the team is out doing real estate sales activities.

You should also provide all marketing, including printing and postage for all team members. This will promote the brand to their sphere, ensuring that the team members are marketing your team model correctly to their SOI.

How to Set Expectations

In this model, team members have moderate flexibility. While they are not employees and are not held to the standards of employees, team members are expected to achieve weekly or monthly productivity milestones. This could include a specific number of contacts, leads, contracts, and closings.

Team members in this model should be expected to produce four to six transactions their first year and eight to 12 transactions thereafter. Half of their business should be coming from their sphere or referrals, while the other half from participating in the team lead generation activities.

High standards are non-negotiable. If team members fail to provide high-quality service or have a poor attitude, they must be corrected or asked to leave. Hire slow and fire fast should be your motto for this team model. You simply cannot afford to carry dead wood using this team model.

How to Reduce Turnover

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How To Form Real Estate Property Partnerships

Aug 9, 2020 How to Form a Partnership in Real Estate: 6 Steps · 1. Conduct a self-evaluation · 2. Find a real estate partner · 3. Define roles and expectations.

Jul 19, 2020 STEP 1: Find Interested Real Estate Investing Partners · STEP 2: Thoroughly Vet Investors You Feel May be a Good Fit · STEP 3: Ensure that

The secret to long term and high quality partnerships is to spend your partners money even more frugally than you would spend your own. This means you NEVER put

Legal Issues To Starting A Real Estate Investment Group

Property Investment Through Limited Company | Smart Company Structure For Your Property Business

Most real estate clubs remain informal and do little more than sit around talking about investments. The best clubs are legally incorporated and have a more formal structure. This doesnt mean spending thousands on paperwork or lawyers. You can incorporate a club and draw up all the documents for less than a few hundred in most states.

You might decide to stay informal for a year or until you build a core of engaged members. Once you have ten or twenty members that are meeting regularly, its time to start thinking about a formal structure and officer roles. This may seem like a lot of work but a formal club can do so much more than just a rag-tag group.

The club shouldnt need insurance unless its creating its own courses or formally advising investors. If any of the members have a co-investing partnership, theyll need all the regular liability and property insurance that comes with the real estate investing.

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How To Set Up A Private Equity Real Estate Fund

IN THIS ARTICLE, we will discuss the current structure of private equity real estate funds, as well as the actions that must be taken in order to establish and properly manage a fund. It examines the reasons for establishing a fund as well as the considerations that should be taken into account while putting one in place. In a subsequent post, we will look at how securities regulations affect the offering and administration of a fund, as well as the terms of typical fund offerings. In its most basic form, a real estate private equity fund is a partnership formed with the goal of raising money for the purpose of continuing real estate investment.

Limited partners , sometimes known as limited partners , are investors who contribute stock to the partnership.

In general, limited partners contribute the majority of the equity capital and are passive investors who have decided to invest in a product or service offered by the sponsoring organization.

Providing some of the equity money, securing investment opportunities, managing the real estate and the fund, and earning fees that are often dependent on the funds success are all responsibilities of sponsors.

When friends and family members join in a business, they are not required to sign a comprehensive partnership agreement, and each dollar of equity investment is regarded equally.

A joint venture between a landowner, a developer, and a money partner is an example of this type of arrangement.

Not Insuring The Property Under The Business Entity

To protect property from liability and damage, investors should consider a comprehensive landlords property insurance policy in the business name. Its critical to have written proof showing the business name as the entity insured, so the insurance company wont have reason to deny coverage in the event of a claim. Investors who have registered separate entities for individual properties would likely need separate coverage for each one.

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What Is A Real Estate Investment Company

A real estate investment company, often referred to as a holding company, is a legal entity that is designed specifically for business activity, including holding investment properties. A limited liability company is the most common structure for real estate holdings, but there are alternatives. These include an LLC with S-Corp designation, limited partnership, sole proprietorship, or corporation . Its uncommon for real estate investors to file as a C-Corp because they are subject to taxation twice — once at a shareholder level and again at a corporate level.

A real estate investment company owns and manages any investment and separates properties held by the company from personal holdings. It essentially acts as a shelter that provides protection from personal liability. If your LLC owns three separate rental properties, each property can be managed individually, but all taxes, income, or losses will be shared within the LLC.

Mentor/mentee Real Estate Team Lead Generation Model

Real Estate Investment Trust

The objective of the Mentor/Mentee Model is to teach them to fish so they can fish for themselves . It is not about the leads you can provide themit is about how they can learn faster from you than on their own.

You will manage the team more like an association than a traditional team. They are paying you a portion of their commissions for access to your lead generation knowledge and experience, not for leads or marketing like with the other models.

You will show them all the techniques you had to learn the hard way to generate seller leads and buyer leads. Lead generation training includes meeting them at the office for outbound prospecting, sphere of influence calls, and planning. Showing them how to do an effective open house and canvassing their neighborhood. To manage your time, plan on running training classes at least once a week.

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The Team Leader Model

Dawn McKenna Group, Naples, Florida

The Team Leader Model is centered around actively promoting the team leader or the team leaders brand. This traditional real estate team model concentrates its efforts around a neighborhood or community.

In this model you, as the team leader, provide structure and resources to team members. Team members promote the team leaders brand and not themselves. Since you are building a brand around a specific community, high standards and unmatched customer service is a must for this structure to achieve massive success.

Consider Flipping Investment Properties

HGTV comes to life in this scenario: you buy in a low-priced property in need of some TLC, restore it as inexpensively as possible, and then flip it for a profit on the secondary market. The approach, known as house flipping, is a little more difficult to execute in real life than it appears on television. Adding to the danger is the fact that so much of the arithmetic underlying flipping involves a very exact estimate of how much repairs would cost, which is not an easy thing to accomplish, says Meyer.

His recommendation: choose a partner with a lot of expertise.

In addition, the longer you keep a property, the less money you make because youre paying a mortgage but not earning any money from the property.

This works as long as the most of the changes are aesthetic in nature and you dont mind a little dust in your home.

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Online Real Estate Platforms

Real estate investing platforms are for people who wish to pool their resources with others to make a larger investment in a commercial or residential property. The investment is made through real estate platforms on the internet, which is also known as real estate crowdfunding. While it does involve some investment cash, it is far less than the amount required to acquire a property outright. Online platforms bring together investors who are wanting to fund projects with real estate developers who are eager to sell their properties.


  • Investments might be made in a single project or in a portfolio of initiatives. Geographical variety is important.
  • Tends to be illliquid with lockup periods
  • s Management fees

How To Invest In Real Estate: 5 Ways To Get Started

LLC Management Structure – Best Legal Entities for Real Estate Investing

If youve ever had a landlord, its likely that you dont want to be one yourself: The job of answering phone calls concerning oversized bugs and overflowing toilets does not appear to be the most glamorous profession in the world. However, when done correctly, real estate investing can be extremely profitable, though not glamorous. It can assist diversify your existing investment portfolio while also providing an extra source of income. Furthermore, many of the finest real estate investments do not necessitate being available at the beck and call of a renter.

Here are some of the most profitable methods to generate money in real estate, ranging from those that require little care to those that require a lot.

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Active Vs Passive Property Partnerships

Partnerships can be structured in a number of creative ways that suit the needs of each individual involved. There are two key types of partnerships: active and passive partnerships.

In an active partnership, each member takes on a part of the workload and has an active role in contributing to projects on a regular basis. All tasks could be split up equally, or perhaps tasks could be split up based on each members level of experience and skillset. However, the idea is that each person involved in the partnership is putting in a direct effort into the collective work.

Alternatively, one or more members could be a silent partner. This means that they are providing capital to fund a project instead of actively participating, thus the name passive partnership. A real estate investor could raise capital from partners who want to reap the financial benefits of investing in real estate without having to directly involve themselves in a project.

An Accountant To Stay Into Profits And Out Of Trouble

When most new investors think about an accountant for their team, they’re thinking about down the road, when they’re doing enough deals to complicate their taxes and will not be able to use the tax preparer in the mall.

The right accounting professional will do much more than that for your business. They can help you to structure your business in the right way to maximize profits and minimize taxes.

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Cash On Cash Returns In Writing

Talk is cheap when deals are made. Real estate investors want to have a guarantee in writing about the returns that will be distributed throughout the course of a year. A COCR or cash on cash return is the most common type of payments included in an investor deal contract. By extracting operating expenses from the total ROI, what is left is the actual returns that can be calculated for a cash on cash investment percentage.


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