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Updated about 6 years ago on .

User Stats

71
Posts
45
Votes
Justin Woodworth
  • Madison WI
45
Votes |
71
Posts

Is this situation a Security or Partnership? Both? Neither? Help

Justin Woodworth
  • Madison WI
Posted

Hey BP'ers,

So I am currently reading Raising Private Capital by Matt Faircloth. It is a wonderful book and very helpful. I have a question that I have not had answered. 

Lets say I find a deal for a rental property but do not have the capital for the down payment on the house. This private lender is willing to give me the 20% down for the down payment of the home. We agree to split profits 50/50 (equity and cash flow). He finances, I manage. Does this turn the property into a security? SEC rules apply?

I only bring this up because I have been researching multiple avenues of getting deals done and I seem to be knee deep in the weeds. I recognize that definitions are important especially when it comes to legality of certain arrangements. 

Thanks for any input! 

  • Justin Woodworth