All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Start here
  • Education
    Forums

    Learn from and contribute to 660K+ real estate discussions

    BiggerPockets Podcast

    Listen to weekly interviews with investors & entrepreneurs

    BiggerPockets Blog

    Delve into 8,800+ articles by experienced investors

    Member Blogs

    Read original articles by BiggerPockets members

    Guides

    Master the ins and outs of fundamental real estate topics

    The Money Show

    Listen to weekly interviews that will help get your financial house in order

    Webinars

    Sign up for this week's free webinars hosted by experienced investors or view previously-held webinar recordings in the Archives

    Videos

    Browse our library of real estate related video content

    Free Course

    Experience The Financial Independence Blueprint video series - a free four-part video series

    Topics
    Property Management Property Types Finance Strategy Finding Deals Business Operations
  • Network
    Members

    Search over 1,270,000 members across BiggerPockets

    Companies

    Explore over 31,000 real estate-related companies

    Real Estate Agents

    Find an investor-friendly agent near you

    Hard Money Lenders

    Pinpoint lenders near you with our nationwide database

    Events

    Find upcoming real estate events and meetups near you

    Jobs

    Browse real estate job opportunities in your area

  • Tools

    Calculators

    • Fix and Flip
    • Rental Property
    • BRRRR
    • Rehab Estimator
    • Wholesaling
    • Mortgage Payment
    • 70% Rule
    • Airbnb Calculator

    Services

    Find a Contractor Get a Mortgage Loan Tenant Screening External Link

    Additional Tools

    FilePlace

    Download presentations, spreadsheets, contracts & more

    REI Resources

    Dig into thousands of curated real estate tools & resources

    Calculators
  • Marketplace
    Properties For Sale

    Buy and sell real estate deals or seek out partners, financing, etc.

    Find Foreclosures External Link

    Search this comprehensive database of nationwide foreclosures

    Ads, Jobs, and Other

    Advertise your real estate business, deals, financing & more

  • Bookstore

    Featured Book

    Recession-Proof Real Estate Investing book cover

    Recession-Proof Real Estate Investing

    This easy-to-follow guide will show you how to make money during all of the market’s twists and turns! Accomplished investor J Scott dives into the theory of economic cycles and the real-world strategies for harnessing them to your advantage.

    Get the book now

    Real Estate Books

    • Flipping and Estimating Bundle
    • How to Invest in Real Estate
    • How to Sell Your Home
    • See All Books
    Real Estate Books

    Shop books covering real estate investing and personal finance.

    Lease Agreement Package New

    Don't spend $1,000 on a lawyer!

    Real Estate Forms

    Lease Agreement Package New

    Don't spend $1,000 on a lawyer!

  • Plans
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
ForumsArrowPrivate Lending & Conventional Mortgage AdviceArrowPrivate Money pledged to "fund"
  • Newest Posts Arrow Down Light
    • Newest Posts
    • Unanswered Discussions
  • Trending Arrow Down Light
    • Top Discussions
    • Trending Discussions
  • Loans & Credit Arrow Down Light
    • Local Real Estate Forums

      Real Estate Forums near you

      • Maryland Real Estate Q&A Discussion Forum 2.6K Posts 389 Discussions
      • Norfolk Real Estate Forum 350 Posts 35 Discussions
      • Norwalk Real Estate Forum 7 Posts -1 Discussions
      • Allentown Real Estate Forum 355 Posts 51 Discussions

      View all Local Real Estate forums

    • General Info
      • New Member Introductions 489K Posts 56K Discussions
      • BiggerPockets Exclusive PRO Area 16K Posts 3.0K Discussions
      • Real Estate Not-So-Successful Stories 523 Posts 41 Discussions
      • BiggerPockets Summer Reading List 92 Posts 14 Discussions
      • Real Estate Quizzes 696 Posts 21 Discussions
      • BiggerPockets Money Podcast 675 Posts 50 Discussions
      • FAQ Forum 132 Posts 9 Discussions
      • BiggerPockets Webinar Discussion Forum 459 Posts 15 Discussions
      • Questions About BiggerPockets and Official Site Announcements 42K Posts 4.1K Discussions
      • Real Estate Success Stories 77K Posts 3.7K Discussions
    • General Real Estate
      • Buying & Selling Real Estate Discussion 424K Posts 58K Discussions
      • Renters Discussion 44K Posts 5.1K Discussions
      • Do it Yourself 32K Posts 3.5K Discussions
      • Military Investing 5.4K Posts 532 Discussions
      • Construction & Remodeling Diaries 6.1K Posts 1.0K Discussions
      • Get Foreclosure Help - Stop Foreclosure Forum 6.6K Posts 910 Discussions
      • Home Owner Association (HOA) Issues & Problems Forum 6.2K Posts 910 Discussions
      • Completed Deal Diaries 5.8K Posts 2.0K Discussions
      • Investor Deal Diaries 17K Posts 862 Discussions
    • Reviews & Feedback
      • Real Estate Deal Analysis and Advice 131K Posts 19K Discussions
      • Real Estate Guru, Book & Course Reviews and Discussions 28K Posts 2.9K Discussions
      • Ask About A Real Estate Company 24K Posts 2.7K Discussions
    • Investor Basics
      • Real Estate Investor Marketing Help & Advice 46K Posts 6.5K Discussions
      • Starting Out 291K Posts 42K Discussions
      • General Real Estate Investing 145K Posts 19K Discussions
      • Investor Psychology 21K Posts 1.6K Discussions
    • Landlord & Tenant Forums
      • Landlord Forums & Rental Property Questions 359K Posts 39K Discussions
      • Mobile Homes & Mobile Home Park Investing 19K Posts 2.3K Discussions
    • Foreclosures
      • HUD, VA, and Tax Sales 10K Posts 1.5K Discussions
      • General Foreclosure & Pre-Foreclosure Forums 33K Posts 5.2K Discussions
      • REOs 17K Posts 2.2K Discussions
      • Short Sales Questions 17K Posts 2.1K Discussions
    • Real Estate Strategies
      • Innovative Strategies 27K Posts 3.4K Discussions
      • Real Estate Wholesaling Questions & Answers 137K Posts 18K Discussions
      • Rent to Own a.k.a. Lease Purchase, Lease Options 15K Posts 2.3K Discussions
      • Short-Term and Vacation Rental Discussion 22K Posts 2.0K Discussions
      • Tax Liens, Notes, Paper, & Cash Flows Discussion 34K Posts 3.9K Discussions
      • Real Estate Development & New Home Construction 19K Posts 2.6K Discussions
      • Rehabbing and House Flipping 110K Posts 13K Discussions
      • 1031 Exchanges 8.8K Posts 1.4K Discussions
    • Commercial Real Estate
      • Commercial Real Estate Investing Forum 36K Posts 4.8K Discussions
      • Multi-Family and Apartment Investing Forums 97K Posts 10K Discussions
    • Business Basics
      • Goals, Business Plans & Entities 26K Posts 3.5K Discussions
    • Real Estate Technology and the Internet
      • Real Estate Technology, Social Media & Blogging 16K Posts 2.3K Discussions
    • Loans, Mortgages, Credit Lines
      • Private Lending & Conventional Mortgage Advice 105K Posts 14K Discussions
      • Creative Real Estate Financing Forum 51K Posts 7.5K Discussions
      • Real Estate Crowdfunding Forums 5.6K Posts 384 Discussions
    • Financial, Tax, and Legal
      • Tax, Legal Issues, Contracts, Self-Directed IRA 100K Posts 15K Discussions
      • Property Insurance Questions & Discussions 11K Posts 1.8K Discussions
      • Personal Finance Forum 18K Posts 2.0K Discussions
    • Real Estate Professionals
      • Contractors 18K Posts 3.7K Discussions
      • Bankers, Lenders, and Mortgage Brokers 12K Posts 1.9K Discussions
      • Real Estate Agent Forums 47K Posts 7.1K Discussions
    • Real Estate Marketplace
      • Marketplace 227K Posts 88K Discussions
      • Real Estate Events and Happenings 57K Posts 12K Discussions
    • Off Topic
      • BiggerPockets Real Estate Investing Summit 2.0K Posts 107 Discussions
      • Housing News & Real Estate Market Discussions 15K Posts 1.8K Discussions
      • Off-Topic 43K Posts 5.3K Discussions
Start a Discussion

Private Money pledged to "fund"

4 Replies

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
Rotate Log in or sign up to reply
  • 1
Joaquin Caballero
  • 72 posts
  • 29 votes

Joaquin Caballero
Real Estate Professional from Schertz, Texas

posted over 4 years ago

My partner and I have been discussing the idea of starting a "fund" for our LLC that would allow private individual to "buy in" to our Property Acquisitions capital. The more they invest, the better their return or obviously, ownership of the fund (shares?). This would be similar to crowdfunding, but we would be offering the fund ourselves, rather than on one of the bigger crowdfunding exchanges, and the fund would be used as a Line of Credit by us, not simply attached to the rehab of a particular property.

I'm pretty sure we would need the assistance of someone who is Series 7 or Series 13 licensed, and possibly an attorney.

Does anyone have any experience with this sort of things and can point me in the right direction as to where/how to get started?

Thanks in advance!

Jon Holdman
  • 22K posts
  • 14K votes

Jon Holdman (Moderator) -
Rental Property Investor from Mercer Island, WA

replied over 4 years ago

You will absolutely need a good securities attorney.  For the most part you will be limited to people you already know and have an existing social relationship with.  If you want to advertise to strangers you can use the new JOBS act exception, but you will then be limited to accredited investors only.  This is a heavily regulated area.  Plan for significant expenses to set this up, somewhere in the $10-25K range.  A conversation with a securities attorney would be a good place to start.   @Bryan Hancock does deals like this and will probably more specific advice.

Bryan Hancock
  • 8.5K posts
  • 3.9K votes

Bryan Hancock
Investor from Round Rock, Texas

replied over 4 years ago

This is a rather complicated subject and there are some mixing of ideas above.  Here is one idea:

The more they invest, the better their return or obviously, ownership of the fund (shares?).

These are two separate things.  Investing more should equate to more shares the same way you'd buy more shares of anything if you invest more.  Tying what investors get based on how much they invest is a completely separate thing.  What fund managers frequently do for this type of incentive is structure compensatory shares that can be subordinate to cash shares to give people an incentive to buy more or to buy sooner.  They can bonus investors with these shares if they invest more.  

This would be similar to crowdfunding, but we would be offering the fund ourselves, rather than on one of the bigger crowdfunding exchanges, and the fund would be used as a Line of Credit by us, not simply attached to the rehab of a particular property.

How would you generate traffic and where would the investors come from?  Would they be local, intra-state, international, etc.?  This matters a lot as to how the fund would be set up and what exemptions you'd select.  There would be no reason to use this as a line of credit because you'd control the funds.  I think you're mixing a few different concepts here as well unless you plan to offer the investors the opportunity to buy into a line of credit that would be structured as a secured or unsecured debt raise.  I think some clarity is needed here.   

I'm pretty sure we would need the assistance of someone who is Series 7 or Series 13 licensed, and possibly an attorney.

It depends on what you're trying to do.  If you're selling the shares yourself you may not need a securities license.  You definitely WILL need an attorney though.  This is NOT a do-it-yourself project.  Proceed with extreme caution.  Note that if you plan to enlist someone to broker securities on your behalf you will need a licensed individual.  People with these types of licenses infrequently broker securities for small operators though.  

As far as pointing you in the right direction if you PM me I can introduce you to some of the best securities attorneys in the country and specifically folks privy to the new securities laws Jon Holdman mentioned above.  

Scott L.
  • 75 posts
  • 28 votes

Scott L.
Investor from Stamford, Connecticut

replied over 4 years ago

Consider speaking to, or reading the blog of, Mark Roderick, a real estate/securities crowdfund attorney at http://crowdfundattny.com/. He spoke at an event with our firm iFunding and came across as very knowledgeable. Regards, Scott Lichtman

Eric Tait
  • 314 posts
  • 133 votes

Eric Tait
Investor from Houston, Texas

replied over 4 years ago

Hello Joaquin, 

Bryan gives the sagest of advice.  And getting with a good securities attorney will help

to flesh out what you are trying to accomplish.

The biggest question that I have when counseling people is whether or not they have a 

profitable business model that can weather a change in the real estate market.

If you are flipping, and the market turns sideways, how are you going to get your investors

their money back?  Any fund that you have/create is going to have a definite life cycle (you

can extend it, if that provision is allowed in your offering documents) and how are you 

going to deal with investors getting their capital back?

Just some things to think about as you conceptually work through this process.

And just remember, always think about what's in it for your investors, and always protect

them first.

  • 1

Top Contributors

Andrew Postell
Andrew Postell
Fort Worth, TX
8.68
Score
Chris Mason
Chris Mason
Oakland, CA
7.57
Score
Jay Hinrichs
Jay Hinrichs
Lake Oswego OR Summerlin, NV
6.51
Score
Kyle J.
Kyle J.
Northern, CA
4.27
Score
Jeff S.
Jeff S.
Los Angeles, CA
3.37
Score

Trending Discussions

  • YOUR biggest hurdle to buying an APARTMENT COMPLEX in 2019 is...
    66 Replies
  • LLC - Must have or nice to have?
    90 Replies
  • Rich Dad, Poor Dad--Is it too late?
    28 Replies
  • $15/Hour Illinois minimum wage
    49 Replies
  • 46 units under contract in Cincinnati
    22 Replies
Close Thin

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here

Already have an account? Click here to log in

Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • Perks
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • Google+
  • YouTube
  • Instagram
© 2004-2019 BiggerPockets, LLC. All Rights Reserved.