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101 | 2017 Manager-Managed LLC | REIT Regulation D Private Placement | 7 Steps

There are many ways of Raising money for Real Estate Investment.

Raising money for Real Estate Investment 541-982-9291In 2017, artificially low interest rates will rise, the economy is already recovering, and real estate bargain prices are still available.

There has never been a better time to purchase real estate, and Equity Capital raised in a Private Placement of LLC Shares can qualify as a Real Estate Investment Trust, and meet down payment requirements for mortgage lenders.

With new ways to market those shares and raise the necessary equity capital enabled by social media and crowd funding, 2017 is the perfect time to plan an offering and create a project.

It is not hard to do a Reg D PPM

  1. Pick a real estate project
  2. Quantify what you have to bring to the table
  3. Create a document
  4. Obtain a contingent commitment from a lender
  5. Raise the Equity capital from family, friends, relatives, investors
  6. Secure the real estate
  7. You are on your way as managing partner!

PICKING A PROJECT

It can be an empty building that can be converted to retail, live and work environment, a business incubator, a farm, an apartment complex, anything with potential, even a whole Ghost Town

WHAT DO YOU HAVE TO INCLUDE

Your assets can be expertise such as management experience or a Real Estate or other professional licence, marketing connections or expertise, cash investment, a dormant, non-producing asset of some kind, or even a related business(s) that can enhance the potential profit.

CREATE A DOCUMENT

You can get templates from a number of places with updated PPM (private placement memorandum), subscription agreements, and associated disclosures and forms for your state.  You can also hire somebody to assist you very inexpensively.  Contrary to popular belief, Lawyers and Accountants are not needed to do this legally, it is the right of every American Citizen to do so with certain exemptions from registration under various federal and state laws:

  • “The coffee table rule”
  • Regulation D, rules 504, 505, 506
  • Uniform Securities act of 1981
  • “Limited Offering Exemption”

CONTINGENT COMMITMENT

Lenders and investors of all kinds have a criteria.  A contingent commitment to participate is obtained by contacting them, asking them what the cirteria is, reading it back to them, and asking them to commit to the criteria they just described, in written or letter form.  These letters can then be added to the PPM, and help to secure investments.  Funding the project then becomes simply a matter of informing all parties that, according to their letters, they have already bought!

EQUITY CAPITAL – SELLING SHARES

With all these other steps in place, it may surprize you how easily the LLC Private Shares can be sold, if and when the project is well planned, researched and prepared, and the upside potential is clearly defined.  The downside potential for equity shares in an early stage offering is a complete loss of capital, so the upside needs to be large: at least a ten times return within 3-5 years.  The assumptions and projections must be credible, and well documented.

SECURE THE REAL ESTATE

Once you have raised the paid in capital, and tied up the property by funding an escrow, with enough downpayment to qualify, the original contingent commitment lender can be given first right of refusal as promised, and other lenders can be shopped.  I have found that often the original commitment is not at the lowest available rate once the project has come this far.

BECOME THE PROJECT MANAGER

If all these things are done well, you are now in complete control of a fully funded, very tax advantaged project.

I have done this many times over the last 30+ years.

If I like the project, I can provide:
1. The documents
2. Help with marketing to my 22M+ audience of Realtors, investors, lenders  and small business people
3. Help with funding on a performance (commissions) basis
My requirements:
1. You take my advice
2. A small equity stake in the project
3. $1500.00 retainer to cover my time and costs associated with the project
 Israeli Rothman 541-982-9291

Original article is here

101 | 2017 Manager-Managed LLC | REIT Regulation D Private Placement

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