Legal Question in Real Estate Law in New Jersey

Real Estate Investing

I have flipped 37 properties in the past 11 months in four states (Michigan, Ohio, Illinois, & Georgia). The money has been provide by my brother and girlfriends mother. I have returned an average of 21% on each transactions. My average turnaround time is 96 days. I have three other people who want to give me money to invest in real etsate.

Up to this point it's been an oral agreement between my brother and mothers girlfriend. Currently, I do this part time, but will go full time in real estate investing in July.

I think it's time to get a written agreement between all parties. Can you recommend which legal document would be best suited for this type of real estate investment transaction?

Asked on 4/20/07, 3:16 pm

3 Answers from Attorneys

John Corbett Corbett Law Firm LLC

Re: Real Estate Investing

It would be a very good idea for you to get a lawyer to formalize your business relationship. This is not just a matter of filing a few papers. Although that will make you "official" for tax purposes (which is the State's main concern) it will not protect your interests or those of your business partners. At a minimum, you need an operating agreement that is tailored to the needs of your business.

So far, it sounds as if you have been doing well. This would be a good time to get all of your investors into a more structured arrangement. In your case, you also need to ensure that the characterization of your business keeps you away from violations of the various real property brokerage statutes. If the work that you do looks anything like collecting a commission or fee for real property brokerage, you will never be able to enforce any collections because the law would require you to be a licensed broker in order to sue.

The bottom line is that you need some help from a lawyer who is good at setting up businesses. My firm handles matters of this type. If I can be of further help to you, call or email. If you remind me that the contact was through Lawguru, the first consultation will be free.

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Answered on 4/20/07, 5:01 pm
Jack Hubbert Law Offices of Jack Hubbert

Re: Real Estate Investing

The most logical choices are forming a limited partnership or a limited liability company. Either type of entity would work based on the facts you have revealed so far. The documentation will very important to protect you from suits by unhappy limited partners / members should a deal or a series of deals go bad.

Your business concept has securities law (State and Federal) implications that must be considered regardless of the type of entity you select.

Best of luck and feel free to reach out to me if you want to discuss this further. I do this kind of work in both PA and NJ.

Of course, nothing in this brief response can be considered legal advice as we do not at this point have any attorney client relationship and there are many facts we have not yet discussed.

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Answered on 4/20/07, 6:41 pm
Robert Davies The Davies Law Firm, P.A.

Re: Real Estate Investing

You need to hire an attorney and get a written agreement amongst all of you stating exactly what your agreement is for future properties, and repeating what the agreement was for the properties that you have already bought and sold. With this much money involved, you have to put it all in writing.

Please hire a lawyer. You have no idea how much trouble and grief will result if anyone does not like any part of the transactions. I have dealt with several. It is also ghastly expensive to have such a fight take place.

On the other hand, I have set up many agreements that avoid any such misunderstanding.

If you would like me to assist, please call my office. I am in Hackensack. A half hour consultation will be $75.00. You can then decide how you would like to proceed.

My contact information can be obtained from the links below, just click on the Attorney Profile link. Let my secretary know you found me through LawGuru.

Disclaimer: Your question and any response does NOT create an attorney-client relationship between you and this law firm. You can not rely on the statements made by an attorney given over the internet. The exact facts of your situation, including facts which you have not mentioned in your question, may completely change the result for your situation.

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Answered on 4/20/07, 3:21 pm

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