LandInvestors.com Forums **Ask A Question** Structure details of an investment agreement

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  • #11134

    Luke Harris
    Participant
    Post count: 146

    I have started using investors on a number of deals and currently my investment agreement contract has me listed as the owner of the properties. I had a potential investor ask if we could change the agreement so that the owner of the property was listed as the investor.

    It seems to me this would cause some legal problems and require me to be a realtor in the state where the property was located, how have others of you structured these deals?

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  • Rob
    Participant
    Post count: 19
    Pro

    If you are not a principal in the transaction in some legal way (like on title), then you may run into the issue that you are representing another party in the transaction which in most states would require a real estate license. I would be curious on how others are structuring partnerships as the other big issue in raising money with partners often times has piles of securities requirements/laws surrounding it. I would think the most simple way to avoid all of that is to have your money partner be the lender and use a share appreciation mortgage (or deed of trust depending on what state you are in). These were common in the old days when the lender loaned the money at x% and got a piece of the pie at closing. The other idea I have seen is for the money partner to “buy” for an option of X% of the future appreciation in the deal.

    Trevor Probandt
    Participant
    Post count: 144
    ProAdvanced

    You can absolutely do it anyway you want, I highly suggest you only do it the way that you want to. Investors are literally a dime a dozen. However, if this investor wants to pony up real money, build an LLC with them and go to town. If not, tell them to kick rocks and pray for 5% rate of return on their money with Wall Street. You already know this stuff, you finally get to be the hot chick at the bar, you have the goods not them. This is your business not theirs, just like letters, on to the next!!!

    Robert Johnson
    Participant
    Post count: 18
    Pro

    Hey Luke, if you don’t mind me asking. How do you setup your investment agreements? I don’t need to know about the split but do you have the investor pay for operating expenses?

    Luke Harris
    Participant
    Post count: 146

    Robert, Ive done a 50/50 split so far on the gross profit, I cover ALL expenses of running the business and the investor pays for the purchase price of the property. Does that help?

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