What are some common ways that you have all structured partnerships or the financial partners of your mhp purchases? What do those details look like from a initial capital allocation and equity % wise?I am interested in both approaching people regarding self directed IRA option…but, do you structure this as a loan (with say 7% interest) or give them equity in the deal? Also, if you bring in a straight financial backer…ie…for the down payment/capital reserve…how do you structure the partnership? Do you just make it 50/50 or are there other arrangements that make more sense?I know we briefly discussed this at the BC, but I want to get into more detail. I can see this will be an issue after purchasing 1-2 parks, how do you effectively raise capital in a way that allows you to operate and close on deals efficiently?John
Our new $5mm fund offers an 8% preferred return to our LPs and then pays investors 50% of additional profits. We do not charge a 4% - 5% management fee off the top. We only get paid off the bottom line (the way our investors get paid), and only after our investors get paid first. Our interests are entirely aligned with our investors.We set up an LLC with Class A shares for the Limited Partners (owed the pref plus 50% of profits), and Class B shares (owed the remaining 50% of profits). The LLC then sets up wholly-owned LLCs that purchase the individual properties.Previously, we had raised money on the same payout structure, but on a deal-by-deal basis. The advantage of raising a fund is that:* the LP gets diversification across several deals in several geographies* the LP and GP both benefit from having cash in the bank and being able to offer all-cash quick-close offers at reduced prices* the GP knows how much ‘runway’ they have, and how many deals to be going after at onceEverybody wins. Feel free to reach out to us directly if you’d like to have a conversation.Best,-Jefferson-www.parkstreetpartners.net
Many of the investors offer referral fees for leads that end up in a purchased park. Do any investors offer an equity stake in the park in lieu of a referral fee? If so, how could this be structured in the LLC?Thanks,
Hi John, I see you posted this a few years back. I have the same questions now as a first time buyer. Would you be willing to have a quick chat to talk about this and your experience if you were able to go through with a purchase? If so my email is ovedelizabeth@gmail.com
Thanks so much!