in the name of the LLC and the Syndicator gets his ownership percentage.

15. The down payment and closing costs for the transaction are funded into escrow from the LLC members’ contributions.

16. Escrow closes and the LLC takes possession of the property.

17. The Syndicator now sends copies of the closing documents to all of the members of the LLC, along with any other organizational documents that may not already be in their possession.

18. The Syndicator now steps into the role of manager. He files a LLC-12 (Statement of Information) with the state within 90 days of the filing of the LLC-1. He’ll do this every 24 months until the LLC is canceled. The LLC-12 names the manager, the address of the LLC, and the Agent for Service of Process.

19. The Syndicator now operates the property on behalf of the LLC. He maintains it, prepares regular operating reports, and distributes earnings to the members according to the provisions of the Operating Agreement.

20. When it’s finally time to liquidate the property, the Syndicator will manage the sales process: Hires the broker or represents the LLC himself, negotiates the offers, and provides the disclosures and reports once the property is in escrow. At the close of escrow, he’ll also make final distributions to the members and wind down the operations of the LLC.

One of the things you may have picked up from this process is that there would be advantages to the Syndicator if he had a real estate license in the state in which he was making acquisitions. As you might expect, he’d be able to earn commissions on the purchase and sale of the property and would also have a great legal standing with regard to collecting fees for its management. What you might not realize is that he’d also be able to obtain Errors and Omissions insurance to protect him in the event something was overlooked in the obviously complicated investment process. While not a requirement, it is something to bear in mind if you intend to do a lot of these.

Hopefully, you have a clearer picture of the process of forming investment groups for commercial real estate. It isn’t easy, but it is straight forward and very lucrative to those who take the time to become good at it.

WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete statement with it: ’Craig Higdon, “The Investment Property Insider,” works as a commercial mortgage broker. He publishes the weekly “Investment Property Insider” e-zine and blog, www.InvestmentPropertyInsider.com. Visit the blog and get a complimentary report on commercial financing techniques.’

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