I just wanted to post an idea that I've been thinking about for some while. I have been approached by several people that if I were to head up some real estate investment 'thing' that all these people would invest what they could in it.
So I started thinking (gotta stop doing that!).... Couldn't I just start up a corporation, open a bank account, take all their money, and then buy something like a house or a huge appartment block? Or do you have to climb through a wack of CRA red tape before being able to do something like this (more like a fund of sorts)?
I have felt restricted in my investing because I can only leverage so much on my own with the personal net worth I have. But if we took 5% of 20 people's net worth, we could do a bunch more, I think.
Could it work like simple shareholders?
Thanks if you've given this some thought.
B.L.I.P. Heros
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So you want to start a REIT? You can sell shares on the tsx to increase your funds. I've owned a few of those, but sold them in favor of the real thing. A close friend of mine has doe this sort of thing, but hit all sorts of roadblocks because of differences. In the end they sold the property for a slight increase, but never realized the full gain of the development. I'm looking at one property in SJ which is 12 suite, and 3 commercial selling at 340'000. I threw in some random expenses, and with the ultra low rents, It brings in around 1400 a month profit. It would be nice to share with a partner, but I just think it would be a ton of headaches. Besides, last couple of years partner has taken on a whole new meaning. I think I'll fly solo for now.
T2. Your lack of faith in man is unwarranted. I see peace, love and acts of righteousness in every transaction I do....oh..dude. Sorry. My crack pipe went out...just a sec...where was I?
Ok. So I hear you, but I'm proposing that if you set it up right, and work with the right guys (me and DJ for example) that you can win. You can get that 12 suite unit whereas flying solo it would be that much more of a strain.
What I'm thinking these days is how can I compress the time in which my investments will produce fruit.
I figure that going bigger is better to do that.
All you have to do is write up the deal correctly. There is no reason why it can't be done. I have a legal service that I pay monthly for that can give good advice as to how to set it up. Then, once we've got the docs we can use that as a template for various deals.
So, you'd need about $34K down on that to make it better, right? 10/10/10. Isn't that easier than you hosting 30K?
Babble-on, Babylon.
Right you are again Mr. Taylors.
Sometimes pooling funds is a good way to start investing. Sometimes the setup involves one skilled investor, and one old lady with the cash. Each plays their own role respectively, and both can benefit. From observatory experience, this can lead to a lot of headaches... especially if it's a [crazy] old lady.
Sometimes even working family (speaking from experience) can even lead to further aches and pains. Legal documents etc are nice.
Generally speaking, the less people, the easier it is to handle money.
However, a good strong companion in life, spirit, or business can really help push things along.
Incorporating is also a good way to manage investments. Having profits go into a company account might reduce certain taxation etc. Then you can withdraw personal income as needed instead of one big lump that may result when selling high-profit property.
It's hard to trust even the closest of people sometimes, but don't forget that even Han SOLO had Chewbacca.
Wrong again wade or wayne or whatever. For larger property over 4 units you have to put 20% down. 68'000 bux.
Basically with three investors involved each member makes 450 a month on his $23'000 investment. It would take 51 months to make back your initial investment, and then your hoping that nothing goes wrong with the property and it goes up in value. Of course the numbers would be the same ratio if you were a sole investor, but you would be making 1400 a month which is a higher number. (did you know that)
Okay nevermind. Joe is right to say it's a good way to start out.
However, I'm not sure that incorporating is such a good idea when you're a small fry. But it's something I know nothing about. I've heard about double taxation or sumpin.
Petered-out, you can just call me 'Mister', or 'sir'. Whichever is easier for you.
Good news! DJ and I both happen to know some stuff about incorporating now, since between the two of us we've done it at least 3 times. There are lots of variables. Those variables are the things that I'm not going to bother doing a 3 year PHD on. What we would do, if we move forward, is get a rough plan, take it to a good lawyer (we know a good lawyer for such a thing) and then to a good accountant (just got a great one today) and finalize the plan and engage those pros to advise and work with us.
Laying the foundation assures that no 'partner' (whatever word you want to use is fine) gets hooped. With a good foundation, and ESPECIALLY if we are actively involved in laying that foundation, there are no grey zones or 'I didn't know about that' issues arising. And those are the issues that tend to happen. "OH! I have to pay for this investment? No way!" or "You mean we have to be equal and fair? No way! I want YOU to do all the work while I collect the paycheque." That's the other thing that always happens.
What I envision is a new entity. Let's call it 2TaylorLiau Investments Inc.
2TLI Inc has three directors: T1, T2, and DJ. T2 is president (because he wants a bigger head than he already has and flashier business card), DJ is secretary (because he's always secretary and isn't afraid of no numbers) and T1 is any ol' random title you want to give him.
2TL1 INC. researches good real estate investments. They make flashy presentations with all sorts of numbers to rooms full of people who don't want to actually research but want to make more money than they are. So we, oblige, take their money, but of course, we charge them somehow for doing all the work. Meanwhile, we make money on the investment, can get into bigger investments while collecting service fees off of them.
Ok. That was my first thought. Now, predictably attack it and refine it.
I have an investment partner now. After all my griping about having a pardner (the manly way of sayin it) 2 hours after posting, my brother joined on board. I didn't us flashy flashcards, or embossed toilet paper, he just called and said "hey stud, lemme throw in that 8k you need".
I offered a 20% per annum return on his cash a few days ago, and after marinating on it, he said yes. He also asked me to manage his 8k while he gallivants around Europe and goes broke. Then he'll call me in tears because he's living on the streets of russia, smokin' crack to keep warm and demand it back. He's my bro, I know his steez.
Oh, I just got the han SOLO remark. haha I'm slow.
How about your investment firm excluding me is called "Barrel of Monkeys"
Then you could say "invest in the bom" Then when the stock price rockets down at lightning speed, nobody will be surprised, and stock analysts will be telling people to "drop the bom".
But seriously, I gotsed a 5 month plan that will require all my cash. So lets get that 8000 suite apartment after.
Ok. Sounds about right. Let's school ourselves for the next 6-8 months, save no less than 25K and then boom. Invest in the bom. Then we can say "That BOM really produced for us this time." Or, when someone asks us for investing advice, "Hey, buddy. If you want my advice, I think you should put it in my BOM."
But T2, check yo' head on yo bro. If he has crack-like tendencies, man... You dont' want to be involved financially at all. What if he wants it and it's in the middle of making him money but he doesn't care about that because he needs crack or food? I'm not being a pessimist but just throwing it out there.
But... how long is he going to Europe? And... I guess this could have all been a joke in which case I'll look like a Gull-i-bull.
I think I'll post a topic on BOM University - UBOM - haha
No he's not a crackhead per se. that's not to say he's never done crack, but he won 20k on the radio, and is concerned it will disappear while he is traveling, and if he needs the money, he just needs to give me a week or so notice. I'll have his money for him even before he leaves if I don't feel like babysitting it.
Thanks for the "check yo head".
I know you're a bro even if your cuttin me down every step of the way.
I gotta go watch desperate housewives.
btw I ain't gay.
20K on the radio? Man. Imagine if serious and seasoned investors like us got 20K for figuring out a Santana guitar riff in 3 seconds and having the fastest redial in the city. I know. God is a good teacher and realizes that we learn by struggling and learn especially how to appreciate what we have. I know it in my head but my heart craves the easy way - the wide gate. I even have a sense of jealousy. Yet, again. I know it is better the route we are travelling here at 77.7 BLIP FM.
So back to 'Group Investing".
I have been approached by two potential people (both Koreans) who want to invest in our real estate market. So, I think we should set up this holding company and give it a shot. I'm thinking we buy a 6 or an 8 plex up north. I know a guy up there who is going to start looking at it.
I was thinking that we set it up and then just sell shares to the investors. Doesn't that work? Then we can pay ourselves with dividends, no? And then it's easier to bring more money into the pool, too. No?
So let's say we have a 100K appart unit. We have 10 people with varying amounts that they can invest, perhaps as follows:
Taylor 1 - 50K (because he's stinkin' rich)
Taylor 2 - 3K (because he's just Taylor 1's apprentice)
Disputable Joe - 5K
Korean hardcore investor - 25K
Korean dabbler - 3K
Korean K-pop star - 45K
etc
etc
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so we gather 131K into our holding co.
Shares are then allocated in according to percentage. We buy a 500-600K 8plex and all live happily ever after.
Ok. That's where I originally wanted the discussion to start anyways. Can we work on running some feasibility on this idea?
tks!
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