Forming LLC to broker money to local investors?

[Account Closed]

Hello everyone,

I have recently formed relationships with a number of real estate investors in my area (Akron / Cleveland, OH) via a law degree I started last August.

I happen to have good relationships with people more towards the Columbus area who have resources and are always looking for avenues through which they can invest. I would like to broker some of their money up to the connections I have in northeast Ohio. 

I understand that there are SEC regulations regarding operations of securities funds and I certainly don't want to violate any of them. I am not attempting to start a REIT. However, I would like to be able to collect money and distribute it to investors in my area; while standing in the middle and taking a mgmt fee. Does anyone have an opinion on if it would be legal for me to form an LLC with myself owning 10%, bringing no money to the table, the other "partner" owning 90% and keeping a type of preferred stock entitling them to receive their own money back before any "common stock" distributions are made?

Is the SEC okay with this or is it seen as a workaround that does not pass the smell test?

Thank you!!!

[Jay Hinrichs]

Originally posted by @Robert Ellis:

Originally posted by @Account Closed:

Hello everyone,

I have recently formed relationships with a number of real estate investors in my area (Akron / Cleveland, OH) via a law degree I started last August.

I happen to have good relationships with people more towards the Columbus area who have resources and are always looking for avenues through which they can invest. I would like to broker some of their money up to the connections I have in northeast Ohio. 

I understand that there are SEC regulations regarding operations of securities funds and I certainly don't want to violate any of them. I am not attempting to start a REIT. However, I would like to be able to collect money and distribute it to investors in my area; while standing in the middle and taking a mgmt fee. Does anyone have an opinion on if it would be legal for me to form an LLC with myself owning 10%, bringing no money to the table, the other "partner" owning 90% and keeping a type of preferred stock entitling them to receive their own money back before any "common stock" distributions are made?

Is the SEC okay with this or is it seen as a workaround that does not pass the smell test?

Thank you!!!

 Hi John, at the risk of sounding redundant to those that have read my posts in the past expounding on the virtues of building a team on the ground……….please build a great team on the ground in the area you’re investing in that specializes in the type (unit count, area, age, maintenance issues etc…) of property you are considering as an investment. Part of that team that I to often leave off the list is an experienced real estate attorney. For of any kind of legal advice regarding real estate, it’s critical to get the advise/info/guidance directly from an attorney. Best of luck with everything!

Robert no sure if you replies are just cut and paste.. but this OP is asking about engaging in the brokerage of investment capital.. not buying rehabbing and running rentals.  

OP  @?darrincary  Darrin Cary has been quite helpful to me when I had some questions about mid south Ohio.. you should talk with him he would be one to collaborate with as well. If he has bandwidth.