Drawbacks of pooling of funds
I understand that creating a fund is expensive (mid 5 figures) and subject to SEC regulation. What are the issues beyond that? An experienced investor started to tell us at the last REIA about how there is significantly more risk involved with pooled funds instead of the standard series of liens. He didn't complete his thought though.
Anyone know why pooled funds would be riskier to use?
Thanks
Most Popular Reply
I agree with Bryan about redemption(s). In addition, keep in mind that there are "easier" ways to "pool" resources (capital, expertise, etc.) that do not involve a "fund". One common technique is creating a multi-mmeber LLC that allows like-minded individuals to contribute resources towards a common goal. No SEC required. Probably want to get an accountant and an attorney (for the Operating Agreement), but this "solution" is cost effective, necessary, and sufficient when dealing with more than one and less than several people.