Real Estate Blind Pools


This handbook is for anyone seeking $500,000 to $5,000,000 to fund a real estate limited partnership without having to identify which properties will be bought, developed or sold on behalf of the investors. This form of investment is colloquially known as a blind pool.

Just as with a real estate investment trust (REIT) where investors do not know which properties the partnership will purchase, a blind pool limited partnership valuation is based on the partnership's prospects-- which in turn are based on the general partner’s track record.

This is different than a specified asset partnership where an investment can be evaluated based on costs and pro-jected revenues.

Interestingly, there is no evidence that the average performance of blind pools differs significantly from the performance of comparable specified asset partnerships.

For most real estate entrepreneurs the advantages of be-ing able to raise money without having to first identify and have under contract a particular property are obvious. However, when hearing the word “securities” in connection with raising money for their particular deal, most real estate operators react as 14th C. Flemish townsmen might have upon hearing of a new plague.

But securities law can be a good thing. Showing sophistication about the securities component of your project can garner respect as well as expand the number of prospec-tive investors, to say nothing of providing asset protec-tion advantages down the road if things go south.

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Published In: Business Organization Updates, Commercial Real Estate Updates, Residential Real Estate Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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