Forming your syndicate organization

Setting up your syndicates organizational structure is in two parts. First is your business structure, or method of doing business, and then the structure of your actual real estate syndicate.

I am not going to dwell much to much on the basics of setting up the form of doing business as you have experience in business or you would not consider this type of venture. I give credit that you can handle this basic business set up fairly easily. Personally I use software from http://adamslegal.cardinalbrands.com

You could do business as any of the typical business types, partnership, sole proprietor, corporation, LLC, etc. If you have a partner or two, you will want to be a partnership or an LLC (LLC is becoming the most common method of doing business), as these two forms of doing business allow for pass through of profits and losses, as well as a place to define each partners contributions and duties. If you go the partnership route or LLC, then an attorney is the next order of business after you lay out the details with your partners. If you choose a sole proprietorship, you need only file the D.B.A. name (doing business as) filed with your county records office and open a bank account.

The Real Estate Syndicate Business Structure.

After you have decided your method of doing business, you will set up the first of your syndicates. Most real estate syndicates are structured as Limited Liability Partnerships (LLPs) registered at the state level. If you do not have a proposed real estate syndicate project yet, you will set up a likely hypothetical project to use as an example and as a sales tool as you search for investors. The process of setting up this first syndicate's paperwork will clarify in your mind how the structure and process works. You can have your attorney and accountant do this work for you but I recommend you do it yourself and let the experts fix it, because you will learn a tremendous amount from struggling your way through the paperwork.

Partnership agreement forms are available from your attorney and at office supply stores. For LLP's you can get an instructional CD from your local office supply store, or get the forms from your states recorder of corporate records office at your state capital's web site.

There are several good books on forming partnerships and NOLO press is a good place to start your search.

Achieving your goals.

Any partnership documents should clear state your goals, your compensation for promoting the deal and for any other services rendered. You will want to set forth any division of future profits, contributions of capital and other valuable goods and services, between you and your operating partners. To avoid future problems get it on paper.

Further, you should outline the intended goals for the real estate syndicates so that everyone knows the results you intend to archive for yourselves and your investors. That will help define the property types you will invest your investors money in as well as the size of the ventures.