Ideal Private Money Entity & avoiding Syndication Liabilities ?

[Nate Sanow]

Hello,

For context followed by my question:

Lately I've sort of stumbled into a plethora of offers for backing the deals I find. Completely SFH, essentially wholesale deals that make more sense to keep them sell sometimes, and I have no desire short term for large MFR / syndication work.

My partner / brother in law is also REALLY well connected to money partners looking to lend.

I have not found this specific conversation here on BP so here goes...

So here’s where I ask my question(s):

Could my brother in law keep a separate LLC that collects private funds, and issues a note on the properties that we want to fix & flip, or Brrrr?

Can he / we NOT publicly advertise but privately discuss raising private money without the risk and liabilities of the SEC stepping in or whatever else the regulations require of official Syndication work?

Or are there ways that are more simple such as simply transferring larger sums of cash?

Or... would you consider getting into joint ventures or other partnerships with limited partnerships that can be bought out so as to pay off original money backers and allow for less complications?

We would not be necessarily asking accredited investors. We certainly are not yet in that class ourselves.

Thanks in advance if you take the time to dialogue.

[Jerel Ehlert]

Without knowing a lot more details, private lending one-to-one is not a security (one lender on one note against one property). Your trouble starts when you start POOLING money from PASSIVE investors who RELY ON OTHERS to generate a profit (your BIL). That's the 2-minute version of what's a security. The 1-to-1 takes out the pooling element.

Hope this helps.