Investor Groups

Comments(11)

• 
  ray_higdon25th April, 2005

  Thanks DWilson, I understand how land trusts work, I was thinking more along the lines of pooling multiple investors money together and how people have structured this before. After the property has been bought we would probably hold it in a land trust but looking for the setup before buying. Any feedback appreciated
  [addsig]

• 
  norrist25th April, 2005

  Ray,
  
  It sounds like you are possibly referring to a REIT...but on a "smaller scale"???
  
  This website should help:
  
  http://www.investinreits.com/learn/formingareit.cfm#1
  
  I am guessing also that a REIT would bring the SEC, etc... into play as a security, as well. Maybe one of the Attorneys here can enlighten us both...
  
  
  [ Edited by norrist on Date 04/25/2005 ]
  
  [ Edited by norrist on Date 04/25/2005 ][ Edited by norrist on Date 04/25/2005 ]

• 
  ray_higdon25th April, 2005

  Yes, that is some of the info I was looking for, thanks, will read that site and see if it helps.
  [addsig]

• 
  ray_higdon26th April, 2005

  I think you are right CK, I was thinking a REIT but it does look like an LLC or limited partnership may be the way to go. On commercial properties is it easy to get financing in the name of a new LLC if you are putting a big chunk of money down on a place?
  [addsig]

• 
  ray_higdon26th April, 2005

  Hey CK, in rereading yuor post, if there are 5 people in this trust, all with 20% ownership, how would the bank want personal guarantees? Co-borrowers or some other way?
  [addsig]

• 
  commercialking26th April, 2005

  Yeah, co-borrowers or just guarantors of the loan to the corporation, LLC, LP or whatever.

• 
  cjmazur26th April, 2005

  I looked at the formation of a REIT and it was quite pricey, but does have some very nice tax features.
  
  If you do research on LP v. LLC, check out the differrence in liability btwn a LP and a member in a LLC.

• 
  cjmazur27th April, 2005

  from a web resource:
  
  To qualify as a REIT with the IRS, a real estate company must agree to pay out in dividends at least 90% of its taxable profit (and fulfill additional but less important requirements). By having REIT status, a company avoids corporate income tax. A regular corporation makes a profit and pays taxes on the entire profits, and then decides how to allocate its after-tax profits between dividends and reinvestment; but a REIT simply distributes all or almost all of its profits and gets to skip the taxation.
  
  So you can suck off 10% as "operating" expense and distribute the rest.

• 
  commercialking27th April, 2005

  News to me but very interesting-- thanks Chet.

• 
  norrist28th April, 2005

  Sounds like we have some interest here...
  
  How about a private group?
  Tim

• 
  ltanksley1st May, 2005

  What about the individual investors in the REIT? Are they double taxed as the REIT and on the dividends?