How to Aggregate and Secure Private Money

[Edmund Ricker]

Good Morning BP,

I have a question about pooling money borrowed from private lenders.

In my example, a real estate investor has 5 individuals who are going to lend 10k each for a total of 50k.  How would the borrower execute the paperwork for the promissory note and deed of trust/mortgage?

Would all lenders be grouped together so they had equal standing?

I know that an attorney would be needed to draft all of the paperwork and the title company would handle some of this.

Just trying to get a better understanding of how the process works.

Thanks,

Ed

[Darren Eady]

I would be careful when fractionalizing ownership of a note that you do not break securities laws. I have a securities attorney that you could call and speak with. My other thought is to form a joint venture agreement with these investors and one LLC that they all own a portion of and invest through one LLC. To date I have kept my note sales to one entity and one note, so I haven't run into this issue, but I'm currently in the process of creating a FUND that will allow for fractionalization.