TAILIEUCHUNG - HandBook Financing Secrets of a Millionaire Real Estate Investor_5

Tham khảo tài liệu 'handbook financing secrets of a millionaire real estate investor_5', tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | 7 Partnerships and Equity Sharing 95 together for the purchase of properties at a foreclosure auction. This type of arrangement should be approached with extreme caution because it looks more like a general partnership than a joint venture. It also may cross over into securities regulations particularly if you are the one soliciting money from other investors. Legal Issues Owning real estate jointly with other parties is an effective financing tool but it can also be a liability. Under the Uniform Partnership Act the law holds all partners liable for each other s actions. Thus if you are a silent partner you could be held liable as the deep pocket. Consider setting up a limited liability company LLC or limited partnership for joint venture projects. The owners of an LLC are shielded from liability for activities of the company and the activities of each other. Limited partners but not general partners of a limited partnership are similarly shielded from personal liability. For more information on LLCs and limited partnerships visit my Web site at LLC . Alternative Arrangement for Partnership Rather than having a partnership own the property partners can realize the same profit goals by using a note and security instrument. One partner will hold title to the property and sign a note to the other partner for the amount of the other partner s cash investment. The note is secured by a mortgage on the property. A second note and mortgage is also executed which will be a shared equity mortgage. A shared equity mortgage has a payoff that is based on a formula that relates to the increase in value of the property. Shared equity mortgages AKA shared appreciation mortgages or participation mortgages were popular when interest rates were so high that commercial borrowers could not maintain positive cash 96 FINANCING SECRETS OF A MILLIONAIRE REAL ESTATE INVESTOR flow. The lender thus dropped the interest rate in return for a share of the future profits in the

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