Basically one of my friends is trying to start up a business where he would raise money by selling shares of the company, where this company would use the funds to build a real estate portfolio, this includes basic rentals, flips, or revo/rental. We will focus more on rentals as we want to build long term equity.
Now the issue is that after the initial investment, he wants to continue to raise money the next year to buy the next property and so on. The issue becomes is how to structure this so early investors are being rewarded. as the way the math was being done, after the 1st year with closing cost and fees, the company valuation would be less then the funded round.
How do you handle multiple investors where its not handle per property but instead as a whole portfolio.
Please point me in the right direction.
You need to talk to an attorney as raising money requires the right offering and knowing who you can and can’t take money from.
Read Gene Trowbridge’s book for more info but I would highly suggest you contact an attorney. You’re talking about starting a fund which is not as simple as just taking money from people. There is a lot of SEC red tape around anything like this and you need to get help from a professional.
Are you referring to this book?
Dumb question, but this is private funding, why would the SEC need to be involved? According to the "Investment Company Act of 1940" fund under 150 Million do not need to go thru the SEC.
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