Author Topic: Collective or Partnership Investing  (Read 5583 times)

Cries

  • Jr. Member
  • **
  • Posts: 91
    • View Profile
Collective or Partnership Investing
« on: April 08, 2013, 07:46:10 PM »
Does anyone out there have experience investing on behalf of friends/family/acquaintances?  If so, would you mind getting on the phone to discuss how you structured your corporate entities or LLP?

I'm basically looking for anecdotal advice on investing out of my personal account vs. a LLP.

Other things I'd love to hear opinions/experiences about include:

How do you handle accounting for and reporting total return of loans on a FMV basis?
Is there a separate LC platform for non-individual investors? (im scheduled to talk to LC this Friday about this)
Did you hire a lawyer to take care of documenting the private placements?
How did you handle pass-through taxes?

Please keep in mind I am not looking to earn significant fees on this stuff, so I'm trying to keep startup costs as low as possible.

Thanks!

ee1x

  • Full Member
  • ***
  • Posts: 124
    • View Profile
    • Email
Re: Collective or Partnership Investing
« Reply #1 on: April 08, 2013, 08:40:55 PM »
If you discover anything useful from this inquiry, I would appreciate if you could forward your findings along.
Investing since March 2012

Show Me The $

  • Full Member
  • ***
  • Posts: 167
    • View Profile
Re: Collective or Partnership Investing
« Reply #2 on: April 09, 2013, 12:18:22 PM »
CYR,

What dollar amount are we talking about here? Total including all investors etc? a private placement done properly will cost you $$$

Cries

  • Jr. Member
  • **
  • Posts: 91
    • View Profile
Re: Collective or Partnership Investing
« Reply #3 on: April 09, 2013, 04:05:21 PM »
I have 6-figures committed.  The investors are likely to commit more after several months of proven stable/excess returns.  I hope to have this in the low 7-figures within a year, as I am already very close to all of the would-be investors. 

AlphaGen

  • Newbie
  • *
  • Posts: 2
    • View Profile
    • Email
Re: Collective or Partnership Investing
« Reply #4 on: April 10, 2013, 03:04:47 PM »
I am intimately familiar with this subject.  Please email me at taipancpg@yahoo.com and we can take this offline.  Thanks..

sociallender

  • Sr. Member
  • ****
  • Posts: 273
    • View Profile
    • Email
Re: Collective or Partnership Investing
« Reply #5 on: April 10, 2013, 05:27:00 PM »
I too would like to know any thoughts on this.  I am not sure it is legal unless you are licensed as it is SEC regulated.  Cyr, have you learned anything yet?

Fred

  • Hero Member
  • *****
  • Posts: 1421
    • View Profile
Re: Collective or Partnership Investing
« Reply #6 on: April 10, 2013, 11:39:27 PM »
If you already got answers to your questions below (from LC), please correct me if I am wrong:

How do you handle accounting for and reporting total return of loans on a FMV basis?

I am not sure if LC will tell you how to do this, but your tax accountant probably would.  From my perspectives, there are 2 approaches in getting the FMV of your portfolio (which may include lates, defaults, etc.):
- use the Recovery Rates
- use FOLIOfn transactions


Is there a separate LC platform for non-individual investors? (im scheduled to talk to LC this Friday about this)

Most likely you will be dealing with LCA rather than LC, and be treated either as a Fund or a SMA (Separately Managed Account).


Did you hire a lawyer to take care of documenting the private placements?

This is highly recommended; Samuel Hu probably can shed more light on this.


How did you handle pass-through taxes?

Not a tax expert here, so you should consult your tax accountant.  However, I would suspect this is dependent on how your entity is incorporated.


Please keep in mind I am not looking to earn significant fees on this stuff, so I'm trying to keep startup costs as low as possible.

Are you planning on the usual "2% on asset, 20% on profit" fee structure?  If not, what kind of fee scenarios are you considering now?

Cries

  • Jr. Member
  • **
  • Posts: 91
    • View Profile
Re: Collective or Partnership Investing
« Reply #7 on: April 12, 2013, 01:44:42 PM »
I am intimately familiar with this subject.  Please email me at taipancpg@yahoo.com and we can take this offline.  Thanks..

Thanks, will do.

Cries

  • Jr. Member
  • **
  • Posts: 91
    • View Profile
Re: Collective or Partnership Investing
« Reply #8 on: April 12, 2013, 01:47:10 PM »
If you already got answers to your questions below (from LC), please correct me if I am wrong:

How do you handle accounting for and reporting total return of loans on a FMV basis?

I am not sure if LC will tell you how to do this, but your tax accountant probably would.  From my perspectives, there are 2 approaches in getting the FMV of your portfolio (which may include lates, defaults, etc.):
- use the Recovery Rates
- use FOLIOfn transactions


Is there a separate LC platform for non-individual investors? (im scheduled to talk to LC this Friday about this)

Most likely you will be dealing with LCA rather than LC, and be treated either as a Fund or a SMA (Separately Managed Account).


Did you hire a lawyer to take care of documenting the private placements?

This is highly recommended; Samuel Hu probably can shed more light on this.


How did you handle pass-through taxes?

Not a tax expert here, so you should consult your tax accountant.  However, I would suspect this is dependent on how your entity is incorporated.


Please keep in mind I am not looking to earn significant fees on this stuff, so I'm trying to keep startup costs as low as possible.

Are you planning on the usual "2% on asset, 20% on profit" fee structure?  If not, what kind of fee scenarios are you considering now?

I appreciate the quick answers.  This is being established specifically for friends/family/co-workers, and so all but the bare-minimum fees would be waived.
I may want to expand that later - but I dont think a 2&20 structure would be all that appealing for someone with minimal track record.

dontvote

  • Full Member
  • ***
  • Posts: 226
    • View Profile
    • Email
Re: Collective or Partnership Investing
« Reply #9 on: April 12, 2013, 03:06:52 PM »
I'm investing for friends and family. I hold their hand with the minimal paperwork, they give me their logins and pay me at the end of the year - Ta DA! no fees! If they don't pay me I threaten their children or drink their booze or both (in opposite order).  Nice turtle you got little Billy for his birthday, bro... sure would be a same if someone stomped the life out of it in front of him, wouldn't it. Pay me my two dollars!

yes it's a headache to log into multiple accounts, but less of a headache than establishing a LLC, pooling funds, administering the accounting, subscriptions and redemptions etc. Would I do this for 25 people and a 1mm total portfolio? nope. do I give up legal protections and rely on my relationships with my friends and family to protect both of us - yup. It's an informal managed account I guess...

dontovercomplicate
dontvote

Interest Radar IRR: 46.11%
NSR ROI: 41.22%
Average Loan Age: Your Moms

Cries

  • Jr. Member
  • **
  • Posts: 91
    • View Profile
Re: Collective or Partnership Investing
« Reply #10 on: April 12, 2013, 06:47:20 PM »
I'm investing for friends and family. I hold their hand with the minimal paperwork, they give me their logins and pay me at the end of the year - Ta DA! no fees! If they don't pay me I threaten their children or drink their booze or both (in opposite order).  Nice turtle you got little Billy for his birthday, bro... sure would be a same if someone stomped the life out of it in front of him, wouldn't it. Pay me my two dollars!

yes it's a headache to log into multiple accounts, but less of a headache than establishing a LLC, pooling funds, administering the accounting, subscriptions and redemptions etc. Would I do this for 25 people and a 1mm total portfolio? nope. do I give up legal protections and rely on my relationships with my friends and family to protect both of us - yup. It's an informal managed account I guess...

dontovercomplicate

Good call.  I guess its hard for me to see where this will end.  I do truly intend to manage these assets for free for the people close to me.  However, I also view it as an opportunity to gain a track record managing an emerging asset class - and establish myself as a reputable manager 2-3years in the future. 


rawraw

  • Hero Member
  • *****
  • Posts: 2756
    • View Profile
Re: Collective or Partnership Investing
« Reply #11 on: April 12, 2013, 10:02:12 PM »
Establish yourself as a reputable manager?  P2P investing isn't rocket science, unless your Bryce Mason :)

Fred

  • Hero Member
  • *****
  • Posts: 1421
    • View Profile
Re: Collective or Partnership Investing
« Reply #12 on: April 12, 2013, 10:49:03 PM »
P2P investing isn't rocket science ...

Agreed.

Here is a simple strategy:  If you simply invest in all of the F grade loans, you'd get (statistically guaranteed) net annualized return of 13.78% -- per https://www.lendingclub.com/info/demand-and-credit-profile.action.


dontvote

  • Full Member
  • ***
  • Posts: 226
    • View Profile
    • Email
Collective or Partnership Investing
« Reply #13 on: April 12, 2013, 11:37:12 PM »
I had to look up "statistically guaranteed". I found a picture of a dog having sex with an orangutang.

JurrasicDont
dontvote

Interest Radar IRR: 46.11%
NSR ROI: 41.22%
Average Loan Age: Your Moms

Fred

  • Hero Member
  • *****
  • Posts: 1421
    • View Profile
Re: Collective or Partnership Investing
« Reply #14 on: April 12, 2013, 11:46:18 PM »
... an orangutang.

It is an "orangutan" -- orang = people, utan = forest.  8)