Ceiling hit at 11 units. Choosing between syndicating my own 38-unit or riding shotgun on someone else's.

Path two, and then path one on the deal after, with a closed deal and a real reporting history behind you. You said yourself you've never raised a dollar. Learning to raise capital and learning to stabilize a 62% occupied building at the same time, with 60k of hard money on the clock, is two hard things stacked. Doing the second one well is what makes the first one easy later.

One flag on path two. If you're bringing the deal and getting paid a share of the promote, make sure everyone is clear on whether you're being compensated for finding the property or for helping raise money, because those two get treated very differently and it's a securities attorney question in whatever state you're in. I'd want that settled in writing before the LOI, not after.

Your warm list is 30 people and you need 14 checks. Every raise I've watched converts somewhere between 20% and 35% of a warm list on a first deal, and that's for people with more relationships than they thought. 30 warm gets you maybe 8 checks. So path one doesn't fail at the pref or the split, it fails at arithmetic on your list. Build the list for six months while you do path two.

The bird dog question is the one I'd sit with. 30% of promote plus an asset management fee on one deal is real money, and what it buys you beyond money is a co-GP reference from someone with nine deals, if he'll give you one. Ask him directly whether he'll let you be named as co-GP in the offering documents and whether he'll be a reference for your own raise in two years. If the answer is no, you're a bird dog.

Dumb question I'd have been embarrassed to ask: if he raises all the equity off his list and signs the loan and you get 30% of the promote, what's actually stopping him from doing this deal without you? What do you have that he can't get?

compass asked the right thing. keystone, you have the market knowledge and you'd be running the lease-up, which is the whole business plan on a 62% occupied building. That's not nothing. But get the scope of your duties in the co-GP agreement in the same detail you'd use for a subcontract, including who pays if the lease-up runs six months long. From running a small team, the difference between a partner and a vendor is whether the obligations are written both directions.

38 units in one building is a different animal from 11 across four small deals. Different at the staffing level, at the collections level, at the point where three tenants stop paying in the same month and it's actually visible in your distributions. I hit that wall going from 9 to 24 and the thing that broke first was my reporting, which is exactly what LPs judge you on. Path two lets you find your break points on someone else's reputation.

What's a 506(b) offering, in plain terms? I gather it limits who you can talk to.

Check the zoning and the parking count before you fall for the vacancy story. A building leased at 62% for two years sometimes has a legal nonconforming issue that made the last owner stop filling it, and that shows up as a lender condition rather than a seller disclosure. Cheap thing to confirm at the county in a week.

Filling 14 vacant units at once means screening 14 tenants at once under time pressure with a lender watching occupancy. That's the part that would scare me. Whoever does the lease-up needs a standard already written down, because pressure is where standards get skipped and then you own the problem for a year.

Reading this to work out where I'd fit in a structure like this, and it seems like the asset management role is the one that actually requires knowing anything about the building. Interesting that it's also the one being paid a fee rather than a share.

Disagreeing with verity and bramble. If you can raise 900k of the 1.4M off 30 warm relationships, you are closer than they're telling you. Find one person to take the last 500k as a lead check with a preferred position and you've done path one. That structure costs you some of your promote and it puts a sophisticated investor across the table from you on every decision, which some people find intolerable. My last two deals were only possible because somebody wrote the last check on worse terms than the rest and I'd do it again over waiting a year.

flint, if the lead check gets a preferred position ahead of the other 14, do the smaller investors have to be told exactly how that works? Feels like the kind of thing that ends friendships if it isn't spelled out on the first page.