Joint venture, co-ownership and investment agreements for Florida real estate holdings.
Why the entity and agreement matter as much as the property
Most multi-party property investments are held through an LLC or similar entity, with an operating agreement governing the relationship between co-investors. The property purchase agreement transfers title; the investment agreement governs what happens between the owners for the life of the holding.
Core terms in a property investment agreement
- Capital contributions and how additional capital calls are handled if the property needs funding.
- Distribution waterfall: the order in which cash flow and sale proceeds are allocated among investors.
- Management rights: who makes day-to-day decisions versus major decisions requiring unanimous or supermajority consent.
- Transfer restrictions: rights of first refusal, buy-sell provisions and consent requirements before an investor can sell its interest.
- Exit mechanics: forced-sale, buyout and dissolution provisions if investors disagree on direction.
Foreign investors and immigration coordination
Real estate can be a component of an E-2 enterprise, or, in limited circumstances, an EB-5 investment, but passive real estate holding alone generally does not satisfy the active, at-risk investment standards those classifications require. Where immigration is a goal, the entity structure and investment agreement should be built around the applicable classification's requirements from the outset.
Process
- 1
Structure
Select the entity type and ownership percentages consistent with the investors' goals and any immigration strategy.
- 2
Draft
Prepare the operating or joint venture agreement addressing contributions, distributions and control.
- 3
Coordinate
Align the investment agreement with the underlying property purchase agreement and financing.
- 4
Maintain
Support capital calls, refinancing and eventual disposition under the agreed terms.
Answers
Frequently asked questions
- Should investment property be held through an LLC?
- Many investors hold commercial property through an LLC for liability separation and flexible management and tax treatment, though the right entity depends on the investors' number, residency and objectives.
- What is a distribution waterfall?
- It is the agreed order in which cash flow and sale proceeds are distributed among investors, often starting with return of capital, then a preferred return, then a split of remaining profit. The waterfall should be defined precisely to avoid disputes when a distribution actually occurs.
- What happens if one investor wants to sell and the others don't?
- This depends entirely on the agreement's transfer and exit provisions. Well-drafted agreements include buy-sell mechanisms, rights of first refusal, or forced-sale procedures that resolve this without litigation.
- Does buying real estate qualify me for an E-2 or EB-5 visa?
- Real estate can support these classifications when it is part of an active, at-risk business enterprise that meets the classification's requirements. Passive rental ownership alone generally does not, and the structure should be built with USCIS standards in mind from the start.
- What is a capital call?
- A capital call is a request for additional funding from investors, typically to cover unbudgeted expenses or opportunities. The agreement should specify how calls are triggered and what happens if an investor does not contribute its share.
Official sources
Consult the official sources above for current rules and procedures.