Bound Brook, NJ · Member since 2018 · 171 posts · 37 votes
I have some private money I can use from multiple people. How should I go about managing it? Do I create one checking account and have everyone transfer money in there? Would this get flagged by the FBI if there's transfer of 40k to 100k going into it? Or do I get a lawyer and do an escrow?
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
6y
I would be very careful as it sounds like you might be creating a security by managing money in a pool. Reg D (Particularly 506(c)) is the exemption from registration that most funds like ours use, but it has strict rules on who you can take money from (accredited/qualified investors). We have a private offering memorandum set up to create the fund and a management agreement between the fund and our company to manage the fund. We don't do business in NJ, so I don't have an NJ attorney to refer you to, but you would want to chat with a securities attorney about the possibility of forming a Reg D offering if you are accepting $ from a lot of people. If it's just one or two in a partnership of some sort, then that's a different story. I hope that helps. Good luck!
the issue with the security things is that so many of these deals are so small IE 4 dudes or dudettes going together to buy a 100k rental.. who is going to spend the money setting that up as a PPM..
Exactly, Which is what I find so frustrating. It seems like you have two options. Ignore many possible deals that make total sense to al parties, or take the risk of technically breaking the law and getting caught.
Sometimes it seems that if your brother loans you a quarter to put in a parking meter it could technically be defined as a security.