Hey guys I am very interested in syndicating a few multi-family deals.
1) Do I need a real estate license to purchase the asset? (If not, do you recommend I get one?)
2) Do I need any special licensing to take a 1% - 3% fee on acquisition and a 1% fee on disposition of the asset?
3) Do I need any licensing to manage the property myself? (I want to save $ to increase the pref IRR just a bit more)
**ALSO: I am a first year analyst so I am not doing this anytime soon. But, I am putting together a game plan and I want to get as much knowledge as possible.
**
Thank you!
-Non Target Guy
Following
Licensure requirements vary state by state (where the asset is located), so you may want to review each states rules, but in general... (answers to each).
NO, if you are a legit principal... if you are charging fees to third parties, most states would say yes.
NO, same as above, if you are a principal then then this is just economics between partners (lawyer will make it say so).
Probably NO, but more difficult to say. In general, owners/principals can self-manage, same exclusion/rule of law as for above. But, some states have more intense requirements for managing residential properties or other items.
Still, having a real estate license as a broker (owner or manager of firm) can be very advantageous for syndicators as you could charge fees to the deal entities (must disclose and partners/investors agree). I think if one was to prop mngt, they would want a third party deal and charge fees (investors would want so they could fire you as mgr). This is better if an independent licensed entity was performing the PM; it also insulates the property investors from liability of the PM (which the lawyers will require).
TL:DR... Probably don't need a license, but may want to have for options/flexibility. Check state laws to be sure.
This is extremely helpful. Thank you so much for this info. Currently I’m looking at a few very small deals to get my feet wet. I definitely want to hit the 8% pref IRR mark and help build a bit of track record.
Thank you again
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