Want to start a private fund with close acquaintances

5 Replies

I would like your thoughts on how I should start a group fund to invest in real estate. I have this idea to save X amount money per week among 4 people. I need to know what I should open up (business checking account, LLC?) to make this happen. How would I write up an operation agreement that would list: no taking out money until amount goal is reached, how to divide earnings, who will control of operations and costs to maintain business etc.. Please I am new to this stuff and will appreciate every information you give me.

@Irving Santos I think it's a bad idea to mix funds together until it's time to invest. In other words, individuals would save their funds and then the funds would only be combined at the closing table when applied to the purchase. Putting money together with no asset to back it sounds like a recipe for disaster.

There are also Dodd Frank investment rules you need to follow if they will be investing and not actively participating in managing the investment. Don’t know enough about the details to tell you what to do, other than look into them so you don’t run afoul of them!

@Irving Santos Nathan has it right. You are asking for trouble. What you describe could easily be determined a security and subject to SEC security laws.  Just because you are doing something on a small scale with people you know it does not excuse you from following the regulations.

Any time you are taking money from investors where the returns are generated primarily by YOUR efforts, its a Security.  Google Reg D Offerings.  PM me if you need additional info or you can head to YouTube channel that has a ton of content.  Hope this helps.

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