How To Structure TIC Or LLC Deal
I have been pitched a deal by someone having some financial problems (in Chap 11, due to several real estate deals gone south shady/fraudulent partner).
I have been offered 120K of equity in a resturant for 70k cash, and becoming co-borrower on a new loan. He needs the cash to recapitalize the properties. So he needs actual cash, not carryback financing or something else creative.
At 1st glance this seems like a good deal, but I want to be able to protect myself. I have seen on my best legal resource (Judge Judy) that frequently co-signers or guarantors of loan will repo the asset, before the lender does.
Can this been done in a real estate deal as well?
Would it be a modified 1st note?
Do lenders do this?
A "fake" 2nd that is an flow-thru to the 1st (e.g. each payment on the second, flows directly thru to the 1st. That was as the holder of the 2nd I am aware of missed payments.
Or are these terms memorialized in the Operating or TIC agreement?
I feel that using an llc albiet a little more expense would be a "cleaner" business structure than an TIC. Does anyone have an opinion on this?
Part of me says "run" on this deal, and the other part says WOW, esp. if there is some negotiability in the percentage he will sell due to his pain.
Thanks.
Or maybe the bank understands that there is no resale market for a restaurant.
I got the contact info for the bank and its atty.
I am going to kick that tire tomorrow.