Real Estate Investment In Detroitfor REIA Detroit by Leor Barak
THANK YOU for being part of
positive change in Detroit!
Real Estate Law
* Buying, Selling, Leasing
* Land Use/ Zoning
* Property Tax Appeals
Areas of Expertise (1)
Business Law
* Forming LLCs
* Forming Nonprofits
* Drafting Contracts
Areas of Expertise (2)
THE AGENDA
I. Introductions
II. Detroit Landscape
III. Acquiring Property
IV. Ownership Structures
V. Due Diligence
VI. Contractors
VII. Asset Managers and Property Managers
VII. Question and Answer session
I. Introductions
Who I am – Problem solver, troubleshooter, boots on the ground
Purpose of this presentation I want to hear from you!
II. Detroit Landscape
More positive press Better political leadership More attractiveness More investment
III. Acquiring Property (1)
Finding Property
Online (zillow, auction.com, etc) Governmental entity Broker/ agent Word of mouth
III. Acquiring Property (2)
Varied Assets and Entry Methods
Structure type (single family, multi, commercial)
Long-term vs. short-term Entry methods (Development, Build Up,
Turnkey)
III. Acquiring Property (3)
Purchase Agreement
Critical Document Ensure due diligence period Ensure proper contingencies
IV. Ownership Structures (1)
In a nutshell Sole Proprietorships Partnerships LLCs S Corporations & C Corporations Nonprofit Corporations L3Cs Community owned
IV. Ownership Structures (2)
Limited Liability Companies (LLCs) Created in early 1990s Formally created and filed with State Hybrid between partnership & corporation
– Taxation like partnership (default)– Liability like corporation
IV. Ownership Structures (3)
Limited Liability Companies (LLCs) Filing Licensing and Regulatory Affairs (LARA) Limited liability Flexibility Single-member vs. multi-member Operating Agreement
IV. Ownership Structures (4)
Nonprofit Corporations
File special corporate form with LARA Nonprofit Corporation vs. 501(c)(3) Also protects liability, but provisions
needed
IV. Ownership Structures (4)
Nonprofit Corporations Advantages:
– May apply for tax-exemption
– Good PR
– Broad support
– More accountability But...moves slower
IV. Ownership Structures (5)
Alternative Models L3C – Low Profit Limited Liability Company
- Hybrid of LLC & Nonprofit
- Created to encourage foundations to make gifts and loans to for-profit
- To be have a tangible effect, the Internal Revenue Code (IRC) must be revised
Community Ownership Model
V. Due Diligence
General Title Survey Physical Inspection (including
environmental) Financial Inspection
V. Due Diligence
Sample Considerations
Inspectors Rent & Deposits Insurance Utilities
VI. Contractors
General Often very difficult to find Often difficult to manage GC model vs. Project manager model Word of mouth recommendations are
best
VII. Asset Managers & Property Managers
General One or both may be necessary Underestimated by small investors Contract as percentage of gross
revenue (often 10%) Should be tied to performance
Let 'em roll....
VIII. QUESTION & ANSWER SESSION
AND THANK YOU!!!
CONCLUDING THOUGHTS
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