The process to co-own commercial real estate can be broken down into 10 simple steps:
Step 1: Realize that your time should be spent doing what you love
We too often lose the forest for the trees as we attack the goal of financial freedom. Consider asking yourself why you started buying real estate in the first place? It was probably to earn passive income so that you could spend your time doing what you love. Millcreek Commercial makes that dream possible as you shift into investment real estate that is truly passive.
Step 2: Recognize that your current real estate holdings are not meeting your needs
Real estate often appreciates and the rent looks great compared to the original purchase price; however, when you consider what that same equity could be producing elsewhere, it typically becomes more advantageous to 1031 exchange. This gives you the ability to sell your building, lock in all the gains, and put the capital into something that will generate income for decades to come.
Step 3: List and sell your property
Make certain that the funds are being sent to a Qualified Intermediary, not directly to you. It is imperative to have a QI involved in order to complete a successful 1031 exchange. We are happy to refer you to someone if you don’t already have one lined up.
Step 4: Get in touch with Millcreek Commercial
Now that you have closed, the 180-day timeline has commenced. You have 45 days to identify and 135 days after that to close on the new property. It’s time to involve Millcreek Commercial to learn about how owning a commercial property is a lot easier than you thought. Through a tenant-in-common structure, or full buy, Millcreek Commercial makes single tenant, absolute triple net lease properties more accessible than ever before. You will have a deeded interest in the building and receive monthly rents without the daily headaches that come with being a landlord. We do this through a reverse syndication—we buy the properties upfront, and then allow you to buy the equity from us so that you own a piece of the pie.
Step 5: Identify which Millcreek Commercial property fits to your timeline and dollar amount
Millcreek Commercial’s portfolio is constantly evolving as we buy new products, sell to our co-owners, and repeat the process. In order to comply with regulations, we cannot have more than 35 investors on any given property. This rule dictates the minimum investment amount for each property. We typically don’t see investments below $100k, but from that point up to several million we see quite often. Once you have selected which properties appeal to you, we will send you the property address and percentage that you would purchase to put on your identification form.
Step 6: Purchase and Sale Agreement
Once you have selected a property to invest in, a Millcreek Commercial agent will draft a purchase and sale agreement that advises you of the exact percentage that your investment will represent. This document will also outline the closing date and other purchase information. This document will first be sent to you as a PDF, followed by the DocuSign version.
Step 7: DocuSign and begin counting down the days till you have “Exchanged Hassle for Happiness” as you co-own commercial real estate
Once you sign your contract via DocuSign, the closing process begins. We then send the information to the title insurance company, Old Republic Title, to open a title search on the property and to provide a title commitment relative to your purchase contract. At that point, we connect all the individuals who help the move the closing process along: you and/or your agent, the Millcreek Commercial executive team, your qualified intermediary, and the necessary closing professionals with Old Republic Title.
Step 8: Sign closing documents
Old Republic Title will send all closing documents and proposed settlement statements for review and will schedule a meeting to close the transaction. One of the closing documents, provided by Millcreek Commercial, after your closing, is the tenant-in-common agreement, which outlines how you will interact with co-owners in the rare event that a decision needs to be made or you are looking to sell your portion of the building.
Step 9: Login to the portal
Millcreek Commercial will send an email invite to join our client portal. This is where your closing documents will be housed and you will be able to track your rental income. The portal makes tax season a breeze as everything will be kept in the same place. CAMS Realty, a third party lease administration company, will then reach out to collect your W-9 information for direct deposit. Rents are paid before the 10th of each month. You will be reached out to shortly before rents are distributed.
Step 10: Happiness!
Now that the process is complete, you can reap the benefits as you co-own commercial real estate: monthly rental income without late-night phone calls, surprise capital expenditures, or any other typical issues associated with being a landlord. Look back at step 1 and live it. Life is to be enjoyed. Repeat these ten steps with your other rentals until your time is back in your hands, and you are able to spend more time doing what you love.