Setting up LLC with my investors and then buying them out

[James Masotti]

Good Morning BiggerPockets

While I know most on here are not attorneys to provide legal advice I am curious to hear from folks who may have done something like this before.

Here is the overview.

I have a few private investors I work with who allow me to make cash acquisitions and then refinance them...basically using the BRRRR method.

I've purchased the first 4 properties out a portfolio and am negotiating with the seller to buy more out of his portfolio that he's looking to sell over the next two years. All told there are 43 more units and I'm immediate interested in 17 which I would like to acquire. 

Going the "traditional" way of using the private investors I would break up these 17 properties into 4 chunks and buy them one at a time for "cash" and then get them refinanced...paying off my investors...and then buy the next batch until we had purchased all 17 over the course of 9 months or so.

When I look at this though...it seems like my transaction costs will be much higher doing so many separate transactions (basically 17 separate acquisitions and then 4 blanket refinances with my credit union)

Instead if I can convince my private lenders to put their money into a new LLC set up to specifically purchase these 17 properties. My partner and I would be the general partners and cover all the administrative costs, much like we do now, and the investors would be limited partners, and we would use their capital for the downpayment. In this way I should be able to purchase the properties...let the loan season for the required 6 months, and then do a cash out refinance on the loan to pay my investors off.

In this scenario there are only 2 transactions and therefore many fewer expenses that would go along with the closings (at least based on my calculations). Structuring the deal this way I could actually increase my cash on cash return by not having as much capital tied up in the property and increase the return for my investors since I would be able to give them preferred returns out of the existing rental income during the 6 month holding period. 

I guess the part I'm not clear on is...

Whether or not this is basically a syndication and I'd need to go through all the SEC requirements to register...and since none of the investors are accredited how will that impact my ability to do this. 

Has anyone done anything like this before? Pros? Cons? Feedback? Advice? Random Commentary?