Archive for Deal Structuring
How Much of a Deal Should You Give Up?
Posted by: | CommentsMajor burning question for real estate investors: how much of the deal should I give up when I bring private investors in?
First, why is this so important? What’s the big deal?
Well, I see way too many real estate investors who either want to give up too much of their deal and kill their own profits. Listen, if you find a deal, put it together manage it and see it through to a profitable result – YOU DESERVE TO GET PAID! You don’t have to give it all to the money person (even if it’s your first deal).
Remember that you’re in business for one reason and one reason only: to make money. No “if’s” “and’s” or “but’s”.
Now the other side of the coin is not giving up enough of the deal. Being too greedy. This can happen a lot too, and often does with inexperienced investors. You can’t keep everything for yourself, because you’re not shouldering all the risk. There has to be a balance somewhere… Read More→
Buy and Hold or Flip with Private Money?
Posted by: | CommentsIs it better to raise private money to buy and hold or flip real estate?
Great question.
If you’re thinking about this, you’ve already got half the battle won – you’ve decided to raise private money. You have picked the right financing option for building a successful and extremely profitable business. Like the old knight said at the end Indiana Jones and Last Crusade: “you have chosen wisely.”
To answer our question, consider my three elements of raising private money: You, Investor, Deal
For illustrative purposes, assume we have the “You” and the “Investor” taken care of – meaning your business plan, offering documents, marketing and other components are in place and you have an investor that is ready, willing and able to place funds with you. Now, you have to make sure that You matches Investor matches Deal.
The Deal component is what you have to focus on – how you are structuring the deal? Read More→
Private Money Deal Structuring for Real Estate Investments
Posted by: | CommentsThere are many choices when it comes to structuring your private money deal. In fact, there are almost “too many” choices and it can be confusing, especially if you are just beginning to raise private investor capital for your real estate investments. Therefore, what I’d like to do here is break down for you the different ways in which you can bring private money into your investment property deals.
First of all, the structure of the deal depends on a few factors, such as:
- Type of investment property (house, apartment, mini-storage, mixed use) – the reason this is important is because each deal has different financial performance characteristics
- Time frame of investment – how long will the deal take from funding to completion? is it a quick flip or a long term hold?
- Private investor objectives – what does the private investor want? are they looking for steady returns or will they defer for bigger upside?
- Tax impact of deal – what is the tax impact to you and your private investors? do accelerated depreciation, 1031’s or other factors come into the picture with the property?
Now that we know some of the drivers of real estate investment deal structure, let’s look at some of the ways you can structure the private money investment: Read More→
