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Old October 31, 2000, 11:46 AM
Tim Spencer
 
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Default Prospective Entrepreneur Questions

I'd appreciate thoughts on the following. I got the idea for this from a book called "The Secrets
of Syndication" by Richard Beguelin 1985. The basic premise is to buy businesses or
income-producing real-estate such as office buildings by forming limited partnerships. The two types of partners are limited partners (invest money and do not manage) and general partner(s) who manage the business and may or may not invest also.

The job of the general partner is to research and find projects that will pay a high enough return on investment (ROI) to attract limited partners. Mr. Beguelin lists several projects in his book that he did. The general partner makes money by 1) charging an upfront fee for finding, structuring and closing the deal, and 2) gets a cut of the profits, usually AFTER the investors have been paid back 100% of the initial investment.

I know this basic business set-up is sound. It just depends on the project. I understand that a lot of commercial real-estate is done this way. I have done much research into this and am actually looking at some specific beach property that I think can pay back 30% - 40% ROI per year. My biggest hurdle and it's due to the fact that I am not really a salesman (but I'm not worried about that because I will put together a prospectus that must sell itself) is this: I cannot advertise publicly for investors - all states have laws that prohibit advertising to locate partners for a limited partnership. And I live in Maryland, which limits the number of limited partners to 35. I need to know how to find people with money to invest! And basically by word of mouth.

My two specific questions are:

1. Have you done this sort of thing; or do you know someone who has? If so, I'd appreciate input on how to locate investors.

2. Has anybody read the aforementioned book? Tried it? What do you think?

Thanks,

Tim Spencer

P.S. Does anyone know why the links to "BYBA" were taken down on the main SOWPub.com page?
 


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