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PPM (Private Placement Memorandum)....Setting one Up...Advise?

Major

Luck is Man-Made
FASTLANE INSIDER
I've Read UNSCRIPTED
Oct 26, 2016
56
225
156
South Carolina
Hello All,

In need of some help creating a PPM (Private Placement Memorandum). My company specialize in purchasing, redeveloping, and operating of manufactured home communities (AKA Mobile Home Parks). Turning around heavily mismanaged and/or neglected maintenance parks is our specialty. By purchasing, developing, and the use of our experience management processes, the parks we purchase become cash-flowing communities. Allowing us to create communities while creating cash-flow. Its a great business and I absolutely love seeing, in a short time, entire communities become full of families and hope again. All while more than doubling in market value, creating a new stream of cashflow, and paying back initial investments within 24 months. Currently I have to use other PPM funds, CMBS loans, and/or bank development loans to fund projects.

It is amazing how man times I have to decline to work with individuals whom wish to invest in a purchase but do not have large sums of cash ($300K or less). It has become extremely hard to secure multiple partners with banks to fund a project. These communities generally require $500K or more down payment with use of a bank, not including funds to rennovate the property after closing.

I am setting up a PPM to allow us to move faster and acquire more communities.

I am looking to see if any users have experience in setting up a PPM or other type of funding pool? Any thoughts, contacts, or literature to help advice would be greatly appreciated.
 

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BizyDad

Know Thyself
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Oct 7, 2019
47
98
108
Start with the right attorney. Do not skimp on this. I do not have a recommendation. But if you hire the right one, he or she will have other connections you'll need. Take your time. Interview many.

Frankly, the numbers seem a little small for this type of raise. Can't you go in another direction for funding?
 
OP
OP
Major

Major

Luck is Man-Made
FASTLANE INSIDER
I've Read UNSCRIPTED
Oct 26, 2016
56
225
156
South Carolina
Start with the right attorney. Do not skimp on this. I do not have a recommendation. But if you hire the right one, he or she will have other connections you'll need. Take your time. Interview many.

Frankly, the numbers seem a little small for this type of raise. Can't you go in another direction for funding?
BizyDad, I really appreciate your reply. I have found three attorney's and currently going through them now.

Yes it may seem small, however we will be working multiple projects at the same time. $500k will work for a purchase of a 40-50 pad average park. The real value add properties (our specialty) are not able to obtain traditional financing due to DCR. For example, I currently am working on a 190 pad fully developed park with only 23 homes currently occupying the property. Purchase and development will be a total of $3.2m. New home inventory installed will require $4.2m. Even with a LTC of 75% (the norm) for $3.2, a total of $5m needs to be raised.

Ordered three recommended books on PPM and Syndication to read this week.
 

BizyDad

Know Thyself
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Oct 7, 2019
47
98
108
That makes more sense Major. One last tip. At the risk of stating the obvious, if you can, do your best to find someone who actually believes in your business (tough, especially from this particular kind of lawyer, right?). That won't be easy. I'd say interview more. The more people you talk to, the more education you'll get, if nothing else.

Ask each one for referrals to others that can help you through this process.
 
OP
OP
Major

Major

Luck is Man-Made
FASTLANE INSIDER
I've Read UNSCRIPTED
Oct 26, 2016
56
225
156
South Carolina
Start with the right attorney. Do not skimp on this. I do not have a recommendation. But if you hire the right one, he or she will have other connections you'll need. Take your time. Interview many.

Frankly, the numbers seem a little small for this type of raise. Can't you go in another direction for funding?
BizyDad, I really appreciate your reply. I have found three attorney's and currently going through them now.

Yes it may seem small, however we will be working multiple projects at the same time. $500k will work for a purchase of a 40-50 pad average park. The real value add properties (our specialty) are not able to obtain traditional financing due to DCR. For example, I currently am working on a 190 pad fully developed park with only 23 homes currently occupying the property. Purchase and development will be a total of $3.2m. New home inventory installed will require $4.2m. Even with a LTC of 75% (the norm) for $3.2, a total of $5m needs to be raised.

Ordered three recommended books on PPM and Syndication to read this week.
That makes more sense Major. One last tip. At the risk of stating the obvious, if you can, do your best to find someone who actually believes in your business (tough, especially from this particular kind of lawyer, right?). That won't be easy. I'd say interview more. The more people you talk to, the more education you'll get, if nothing else.

Ask each one for referrals to others that can help you through this process.
Thank you for your input. I have identified three attorneys and am working on researching a few others to setup the Offering. Will be putting updates on this topic as events unfold.
 

jarb

New Contributor
Nov 6, 2019
3
1
11
If your prospective investors are known to you and accredited a 506b offering is simple and you don't need a PPM. If your prospective investors are not known to you yet but are accredited a 506c offering might be a good way to go. In any event, make sure you file a Form D and comply with state blue sky laws.
 

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