Private Placement Memorandum Costs & Self Directed IRA

[Shawn M.]

I am buying a property and want to have an out of state friend be a 20% equity partner in the investment. However he wants to use his self directed IRA. The IRA custodian says that we need a PPM in place to have him invest in my LLC.

It seems like a lot of paperwork to have him invest, Why do we need to register with the SEC and how much will all that cost?

The property is a 4 family and I would be 80% owner and he would be a silent 20% owner. 

Any advice on how to do this?

[Lew Payne]

LLCs are considered securities in some states and may be required to meet the standards of securities offerings.  In other states, they are not.  Would it not be wiser to address legal questions to your own attorney, in your own state?