borrowing private money and legal consequences
I have found one answer in the search but not directly related to this. I'm interested in the idea of borrowing money from others. But from what I understand there was rules with in the SEC for this. I'm not sure if that meant you had to be a successful investor by their terms or not. My problem is I'm great at finding money its just the credibility. But I do have friends who are investors who have great credibility. I have to do investment properties but haven't done this for years with other investors. The reason I'm interested is a bank will not loan me the money on more than four units but I have a friend who has many that is looking at an apartment complex. I told him I would be willing to borrow money from someone I know to invest and take a percentage of the cash flow. This way the bank will loan me money next time because I will have experience with multi unit complexes.
What are some of the terms you may have used in the past or present with your private loans? This like balloon payments, lower interest, when your investor gets their money back, etc.
Outside of that deal I am interested in doing this for other 4 plex and larger units. Just the 20% down is really needed but the question is cashing that investor out in the future while also giving them a return that is decent. Also if the bank loaning that money would be interested unless they are partners. Or is it better then to have a business structure that has all investors for that deal in it so the bank doesn't see it as 100% finance? Just some of the questions I have. Maybe I can give a short story line you can use to show me some ideas.
John is an investor but wants to use Jerry and Jason's money to buy a 4 plex that costs 175,000 and gross 2200 a month. Needs minimal work. And bank wants 6 months of payments in savings..