SYndication and deal making
Syndicating real estate is a fancy way to say that we are bringing multiple investors to the table to purchase property(ies). Let's talk about our structure for deals like this.
We find property that we would like to purchase, and tell you about it. Our research includes:
We (Blast REI and investors) come to an agreement on terms, including expected purchase price, and the Deal Structure (see below). A contract is drawn up layout out all terms of the agreement for all parties to sign.
Blast REI goes to work making our offer and working to close the property (this includes inspections, appraisals, closing a mortgage, etc).
The Deal Structure
Reserves are money that stay in the account as profits are made, in order to ensure the account has sufficient money in order to maintain the property. This money goes to pay for new roof, new boilers, new hot water heaters, bug infestations, and any other issues or required maintenance for the property.
There are three types of maintenance, emergency maintenance, cosmetic maintenance, and preventative maintenance.
Emergency Maintenance: If a tenant/neighbor calls with something that needs to be take care of IMMEDIATELY, this can be considered emergency maintenance. Any time there is a water issue, or something that is a hazard to the health of the occupants, it needs to be dealt with quickly.
The Investor would have no voting rights for Emergency Maintenance since it needs to be done immediately.
Cosmetic Maintenance: Anything that can be classified as a want, is considered cosmetic. If a faucet should be replaced, or a room painted, these are considered cosmetic.
Any cosmetic maintenance would be done with investor's input, however there is a lot of gray area here. If we can agree that the maintenance would increase the revenue, then it is worth discussing.
Preventative Maintenance: Anything that should be done regularly can be considered preventative maintenance. For example, option pest control, roof inspections, furnace servicing, or anything that is not required but may make certain aspects of the home last longer, can be considered preventative.
This type of maintenance will be required on some levels, to help get the most out of mechanicals, so investors will have no input here as well.
To learn more about this process or to see the properties we are finding for investors and buying ourselves, just ask in the contact form by clicking the button below!
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