How to structure a deal with multiple investors

3 Replies

I intend to purchase a multi family investment property and I have several individuals who want to contribute  to the capital necessary to acquire a property. At this point the capital is not an issue however, I need information on how to structure a deal properly and pay off my investors and what interest rate is appropriate to offer investors. Please offer any insight at all.

@William Washington with the limited information in your post, it sounds like you may be offering a security and should be setting up a Reg D offering (syndication). With the syndication, your company or you will be the General Partner (sponsor) and your investors will be the Limited Partners (LP). There are endless ways to set this up, but the most common that I see is a 1-3% acquisition fee, 1-3% asset management fee, 6-9% preferred return and 60-80% of the ownership equity to the limited partners. 

See a few articles on syndication: 

https://www.biggerpockets.com/blogs/10145/73373-op...

and

https://www.biggerpockets.com/blogs/10145/72118-sy...

It can be done but your getting into state and Federal laws governing securities. Lots of consumer protection laws. 

Using the proper terminology is critical especially if you start talking about “paying a rate of return” and such. There are regulations regarding advertising, pooling funds,

Seek the advice of an attorney. 

@William Washington do not even present a particular deal to your potential investors until after you consult legal counsel as to the proper business structure & exemption that fits your needs. The reason is you may disqualify a deal from certain securities exemptions/investors by simply sharing it with the wrong people.