Looking to build some traction on this program to facilitate the purchase, renovation and resale of REO assets in Greater Tampa Bay with eventual roll out to select national markets. We are looking for working partners and capital partners. Here are the basics:
- Working Partner and Capital Partner form a Joint Venture (JV) to purchase the property on an all-cash basis
- Co-Investment: Working Partner manages the property and rehab (if any) and contributes not less than 20% of the required capitalization - Capital Partner contributes up to 80% of the maximum capitalization
- Term: up to 36 months
- Exit fee payable to the Capital Partner: If the JV sells or refinances the property in the first 12 months there is an Exit Fee due to the Capital Partner calculated on the original capital contribution; each year that goes by the exit fee is reduced.
- Preferred Return Payable to the Capital Partner: 10-12% depending on the risk, the strength of the opportunity and the amount of co-investment by the Working Partner
- Preference: Capital Partner is paid a preferred return on their invested capital calculated as a simple interest payment without any amortization required
- Upside from sale or refinance goes to the Working Partner less any preferred return or exit fee
- Deed: Title held by the JV in proportion to the cash investment.
- Security: Should Working Partner default on preferred payments to Capital Partner there is a mechanism to facilitate rapid title transfer to Capital Partner
- Set-up and closing costs: Attorney Fees of not less than $2,000 due prior to JV document drafting, Bison Consulting Fee paid at closing, no Points or Fees payable to the Working Partner or Capital Partner
The basics of the transaction we recently closed in less than 4 business days in Tampa Bay, FL:
- Waterfront property that had an $800,000 mortgage on it in 'the good old days'
- Went to REO
- Working Partner found the deal and negotiated a PP of $275,000
- Comps supported a current value of $375,000 - $425,000
- Working Partner came to closing w/ $55,000
- Capital Partner came to closing w/ $220,000
Could be an interesting platform. See the merit in this?