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Top Adding - Commercial Real Estate Syndication: Property Selection and Purchase, Part 1
Let’s assume that you’ve decided to start assembling groups of investors to buy investment real estate. If you followed my Roadmap of a successful syndication in my previous articles (Part 1 and Part 2), then
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
you know that the first step is to research a neighborhood and pick a property to buy. You’ll first want to focus on the type of commercial real estate to purchase for your syndications.
So what is the best k
So what is the best k
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
nd of investment real estate? In the process of putting together your groups, you’ll come to realize that not all types of real estate are “created equal” from an investment perspective. Here is a breakdown o
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
f property types and their attractiveness as syndication investments:
LAND: Including Remote (currently unusable), agricultural, and “pre-builder” land.
1. “Remote” land is held for a long period of time wit
LAND: Including Remote (currently unusable), agricultural, and “pre-builder” land.
1. “Remote” land is held for a long period of time wit
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
the expectation that growth will increase its value. Unfortunately, it’s highly risky and provides no current income for investors. The biggest down side is that investors would have to make periodic contrib
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
utions of capital to cover expenses for taxes, insurance, and possibly loan payments.
2. Agricultural land is used to create crops for sale. It is essentially unimproved land used in a business and its value
2. Agricultural land is used to create crops for sale. It is essentially unimproved land used in a business and its value
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
s derived from the ongoing operations of that business.
3. “Pre-builder” land is subdivided and sold off to various builders who complete the end product, whether housing or commercial. The land is effectivel
3. “Pre-builder” land is subdivided and sold off to various builders who complete the end product, whether housing or commercial. The land is effectivel
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
y inventory and its value is created in the subdivision process.
CONSTRUCTION: Including new commercial and sub-division projects, beyond the pre-builder stage.
EXISTING: Operating residential and commercia
CONSTRUCTION: Including new commercial and sub-division projects, beyond the pre-builder stage.
EXISTING: Operating residential and commercia
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
income producing property.
If we go by the list above, we’ll soon realize that as syndicators, we’ll want to focus our efforts on only one of the major categories. This would be income producing rental prope
If we go by the list above, we’ll soon realize that as syndicators, we’ll want to focus our efforts on only one of the major categories. This would be income producing rental prope
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
rty. There are several reasons for this, some obvious, and others that can get you into a heap of trouble if you don’t spend some serious time with your attorney. You’ll want to be clear on the benefits both
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
ou and your co-investors will derive from your real estate investment efforts, as well. This will help not only in focusing your efforts, but in promoting your properties to prospective investors. Here they a
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
re:
- Agricultural land, pre-builder land, and new construction projects derive their value from the efforts of others beyond the investment in the property itself. This creates a “corporate securities risk”
- Agricultural land, pre-builder land, and new construction projects derive their value from the efforts of others beyond the investment in the property itself. This creates a “corporate securities risk”
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
for the money investors and puts the syndicator under the jurisdiction of both state and Federal securities laws. Ultimately, it means that you could be severely liable to your investors if things don’t go as
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
planned. Do not operate in these types of investments without both significant previous experience and excellent legal help.
- Remote land will most likely require “capital calls” to existing investors to pa
- Remote land will most likely require “capital calls” to existing investors to pa
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
real estate taxes, insurance, and debt service as you wait for its value to increase. There is nothing an investor hates more than a call from his managing partner to ask for more money. Even if it’s disclos
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
ed up front and anticipated, it’s not good psychologically.
With existing properties:
1. Investors’ capital is contributed without the expectation of future contributions, in most cases.
2. There is minimal
With existing properties:
1. Investors’ capital is contributed without the expectation of future contributions, in most cases.
2. There is minimal
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
nvolvement of the capital contributors beyond providing the investment funds.
3. The owners can expect to receive spend-able income on a periodic basis.
4. The owners can expect an increase in equity through
3. The owners can expect to receive spend-able income on a periodic basis.
4. The owners can expect an increase in equity through
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
the amortization of any loan used to assist in the acquisition.
5. There is also a realistic expectation of an increase in value of the asset from both monetary inflation and appreciation.
6. There will also
5. There is also a realistic expectation of an increase in value of the asset from both monetary inflation and appreciation.
6. There will also
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
e tax benefits from depreciation of the improvements (not the land) and utilizing a 1031 Exchange reinvestment strategy at the property’s sale.
So as we go forward on this topic, we will focus on existing, ope
So as we go forward on this topic, we will focus on existing, ope
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
rating, commercial rental income properties. This greatly reduces the syndicator’s exposure to regulatory requirements and provides investors with regular checks, making them very happy to get your phone calls
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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