Today I met with my friend who invests in apartment buildings for lunch. We went over how he had structured some of his deals and partnerships. I’m trying to figure out how to structure a partnership to go into a 80+ unit building in Texas.
I’ve bought many houses before but this is a whole new animal. For starters, 70-80% of the time earnest money is non-refundable. This means that we’d have to put down 1% of earnest money or $25,000 on a $2.5 million dollar place that we wouldn’t get back if the due diligence revealed some issues.
The next question is how do we hold title? LLC, LP, TIC? Right now, it’s looking like a TIC (Tenant in Common) is the way to go. This allows all partners to 1031 out of the deal. And now what’s this “master lease” part of a TIC?
Then there’s the big commercial loan. It’s now more about the property than my FICO score. I have to produce a financial and investing resume, as do my partners.
I’ve got alot of learning to do.