How to Get Into the GP With No Money Down

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So the question often comes up, how do I become part of the general partnership and get a little bit more bang for my buck, one of those ways is becoming what’s called a key principle or loan guarantor for the team. So what this is here for as we go out and get one of these big loans for these Fannie Mae, Freddie Mac, or any other loan, we need to have a partnership team or keep principle slash loan guarantor roster of individuals whose network gets us over the hump greater than or equal to the loan. So for example, for going after a $20 million building, probably going to need a several guys or one guy who has $20 million net worth to be able to sign a debt. So in order for us to qualify, or in order for your qualified typically, that means, you know, you’ve got a million dollar net worth or above, I mean, most guys in our sphere about a one to $2 million range. So guys, unfortunately, those guys are kind of a diamond doesn’t just one of the guys, it’s the same. But if you know, if you’re above $3 million dollars or more, you’re actually very valuable. And you can definitely get compensated for sending off a debt on one of these deals, it has nothing to do with bringing in any money involved. So what a lot of these guys will do these high net worth investors, they’ll sign on debt, and I get a little piece of the deal just for doing so there is obviously risk involved, right. But I think there’s a difference between non recourse and recourse that and before you start doing this, you know, I would say you got to really strongly feel confident in you’re working with defeat, I wouldn’t be doing it on your first board round with somebody doesn’t matter how much they’re paying you. Because essentially, in a way, you’re putting all your family network on the line. And you can encumber your debt several several times. So I’ve signed on, I don’t even know how many deals at this point, also with non recourse debt, but it’s crazy to me how you could sign on multiple walls. But then again, you know, a lot of these are asset backed deals. And as real estate bows, the value is there built into the asset with some common questions that come up are how does this work? How does this book my return? Well, it’s not really bumping your return, you’re just kind of picking up some general partnership shares overall shares in the process. So there’s always a set aside a certain amount for people who do this type of stuff. And talking back about the non recourse components, you got to remember that even if a deal is non recourse, there’s usually a bad actor clause involved with the bad boy carve out where if somebody in the general partnership does anything fraudulent steals money and vessels that the agency lender can avoid that non recourse component and come back for everybody for the debt. At that point, I’m just speculating, you know, I think they’re gonna kind of come after the people with the biggest wallet folks. And then it becomes definitely an internal litigation issue, but hopefully it never goes that far. And you know, another way that people will get into deals with Latino money as a general partnership is for putting up the hard money on these deals. So certain markets such as Dallas are super competitive and to be considered serious and for them to even look at your offer, they have to put in 100 or $200,000 of hard money and for a lot of new sponsors, they may not even have that money in their pocket. And this is why I like working with people who are at least a million dollar net worth and above the fray Why’d I shy away from investing with house flippers because a lot of those guys are under half a million billion dollars unless they’ve been doing it for several years. I just don’t want to get screwed over by guys who don’t have a net worth to cover it personally and this is one of my criteria when investing personally but I digress there so what you could do is you could come in and put up the hard money for somebody who doesn’t have it and negotiate some percentage of the general partnership for doing so there it is long as the deal closes you should be able to get your hard money back and in return you get shares of the deal but I don’t know I feel uncomfortable with this. I think it’s a lot of money I don’t know if it’s quite worth it. I’ve seen deals go through due diligence and for some reason it falls out I also see a lot of deals that get shoved through because the operator doesn’t want to lose their hard money or they don’t want to pay off their hard money lender and not because they didn’t close the deal. That can always be a little shady too but are they for me I sign on the debt on loans I think that is pretty fair in terms of what you’re compensated with and you know you should like the deal you should trust the people you’re working with. The same goes for any work with people you know, like or trusts to begin with, and yeah can be a great way if you’re higher than a few billion dollars net worth to get a little bang for your buck but if you if you guys have any more of these questions, I would check it out at simplepassivecashflow.com/kp or go to simplepassivecashflow.com/syndication for the complete syndication guide there and I am coming up with the ecourse I’m actually working on this month as I’m wrapping up wrapping up the home arrest here why it’d helped me get stuff done without a lot of other distractions. So be on the lookout for that and we’ll catch you guys next time.

 

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This website offers very general information concerning real estate for investment purposes every investor situation is unique always seek the services of licensed third party appraisers inspectors to verify the value and condition of any property you intend to purchase. Use the services of professional title and escrow companies and licensed tax investment and or legal advisor before relying on any information contained herein information is not guaranteed as an every investment there is risk. The content found here is just my opinion and things change and I reserve the right to change my mind. Above all else, do your own analysis and think for yourself because in the end, you’re the only person who is going to look out for your best interests.

 

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