I'm trying to create an investment group with my friends and family. Any suggestions or any material I can read. We plan on putting money in a fund monthly to buy multi-family homes in Essex County New Jersey.
I might suggest you first have a few fun meetings to discuss the benefits of real estate investing and get people on the same page as far as education and understanding of using real estate as wealth building and retirement planning, something everyone should be concerned about. Once you are somewhat or in complete agreement start learning more in earnest about where and what properties would produce good results and be honest with yourselves, learn to look at it as a business. When things go wrong if they do go wrong its always very personal when it comes to friends and family. Emotions can run high, great if things turn out positive but very bad if things should not always turn out well.
Hopefully others in your family are already into real estate or in construction. Start to get yourselves exposed and discuss different strategies and different properties. Do not start until you truly have sufficient funds and make sure you keep a reserve to be able to deal with contingencies or unexpected expenses. There are usually allot of books on real estate investing at any bookstore, chose some you would like everyone to read, discuss them among yourselves to create mutual understanding. Do not go for the no money down, no credit schemes you will have plenty of time to explore those later. Remember to protect each other at all times and do things comfortably, do not create stress for each other or worries. Wait until you really have enough or more than enough money to fund the projects you will select to invest in.
Good luck I hope you plan works. Its great to think about it but very difficult to do in general and it can even be harder with friends and family.
thNk you so much for that information Gilbert. However I have been doing some research for the past year and I own a multi-family already that's producing some nice cash flow. The information I'm really looking for is something wrapped around a group or club investing together. Is there any laws against and also would it wiser to become an LLC or should we just have an written agreement amongst us. Will it be easy to find funding as an llc. I would love to do 10%or 20% down.
It is a good idea to have a legal structure. Whether you form an LLC or an investment club among you I would suggest you consult this with an attorney to help you put that together. Each type of legal structure has its pro and cons and also its particulars according to who is going to be responsible for what. Maybe some will be more active and some will be more passive discuss these things with your attorney or whoever you chose to help you set up the legal structure that is right for you, your friends and family.
I would not go the route of a simple written agreement. There are proper legal structures that would fit exactly what you want to do that already have legal president based on others who have desired to do the same thing as you propose.
You can spend months discussing among yourselves what you need and what each would like but I feel confident an experienced attorney can get you there much quicker and help you organize yourselves more effectively but to answer your question yes there are established laws that govern what you can do and how you need to do it to be within the law for what you propose to do.
You do not want to get caught practicing security transactions without a license and there are many laws that govern how you can group people together to invest. You have to tread lightly and make sure you are not breaking the law. This is why I highly recommend you consult with an attorney to structure your organization legally and properly.
If you want to start out simply asking questions you might start at your local Small Business administration and perhaps they can offer you some guidance. You can even visit local universities and seek out the advise of people within a business department. They are very helpful most times and happy to guide you fee of charge.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!