Launching Real Estate Syndications - Ep 20 - Final Distributions of Returns to Your Investors
Tilden Moschetti: You've
basically re entered the
atmosphere and you are on the
surface of the Earth, you just
need to emerge from the capsule.
And, and you are done. And by
that, I mean make those final
distributions to your investors.
Now, how do we do that? What is
the process for doing it?
Well, there's several processes
that we use. So first off, we've
gotten out of this big pot of
money that the deal is closed,
the first thing we do is we call
up our accountant and we say, is
there going to be a taxable
event? What is it going to cost
for me to close out anything
that happens? So that way
everything is, is normal and
takes place in a normal way. Now
most of the time, your taxes are
going to flow through directly
to your investors, and you don't
need to worry. But check with
your accountant. First, I've had
it bite me where my accountant
said, no, no problem. And then
the accountant later said, Oh,
actually I made a mistake, there
is going to be taxes that the
company itself owes. So check
with your accountant and double
check with your accountant,
because it creates quite a mess
otherwise. So check with the
accountant First, figure out
what the cost is going to be.
And see if you can pre pay that
amount with the accountant to do
all of your closing K ones. So
do all of the paperwork and get
all that stuff done. See if you
can arrange and get a price on
it that's fixed. And that they
so that they can do that work
right now, rather than waiting
until the normal tax cycle. Now,
they may not be able to actually
issue the K ones yet, depending
on where it is. But they can
certainly charge you for it, and
then do the work when it's done.
That way. It's just one thing
that's off your plate that
you've already paid for. And
it's done, the cash is spent,
you've already allocated,
there's not going to be more
owing, talk to you and a lawyer
if you've also got some other
closing stuff to do to see if
there's any costs that are
associated with that, what we're
trying to do is take this pot of
money and get rid of all of the
expenses out of it so that the
only thing left is distributing
that cash to the investors. So
now that you've done that, you
want to take all that cash, and
you're going to add into that
cash, all the amount that's left
in reserve. So all that reserve
money is also cash that goes
back to the investors, it's
their money, right? That's what
the reserve account was for. So
that all goes back to them. And
then it's a simple matter of
figuring out what the what that
home price is going to be per
share, queuing it up and making
it accordingly. Now here's one
other step that I do. And I
strongly encourage you to do it
as well send the each investor a
final accounting that shows
every single distribution that
you've done, and then show them
where that relates into the pot.
Because every now and then
there's been a little bit of a
different calculation that's
moved things by $1 or two. And
this is your chance to square it
up, you make a nice statement
showed shows everything and then
make sure everything tallies at
the end before you send that to
all your investors. And then you
can then make those payments,
whether by direct deposit, which
is a lot better, because you can
close that bank account sooner
wire or you have to do it by
cheque, you can do it by cheque.
But then you have to wait for
the checks to clear. And I've
had the situation where I've
sent checks to an investor and
it hasn't closed for like six
months. And then there were more
fees because the bank was on top
of it. Now, it wasn't such a
huge dollar amount that I was
stressing about it. I just paid
those out of my money because I
needed it closed. I knew that
they would get it done and I
didn't want to be nickel and
diming them and you probably
would make the same decision. So
that is how we do final
distributions. And in our next
module, our last last module for
reentry. We're going to go
through the closing itself.
We're going to just reiterate a
few of the things we talked
about here because this is
really we're putting the bow on
the package and all is done.
You've now emerged out of the
capsule and now it'll be the
closing party at at NASA
Headquarters There's so with
that we'll go to the next module