Originally posted by @Joe Martin :
I have a couple of investors that want to participate in a flip with me. I want to provide them collateral which would be the property. Does it make since to structure this in a trust with me as trustee and investors as beneficiaries based on percentages invested? Or do I create an LLC just for this property and have investors lend the LLC the money.
Investors will get 12% interest only payments until property is sold and then principal is returned.
Trying to come up with a creative way to do this and am open to any ideas.
No need for an expensive Trust. I buy in my LLC and my investors get a written contract as to their share based on agreement. The LLC is intended to insulate *liabilities* (think lawsuits) such that if a lawsuit occurs, it doesn't cross over from or to the LLC. The investors are protected (as much as can be) with them lending to your LLC. Your agreement to them is simply what a bank has with you when you buy a personal residence, lender and borrower.
Mike, do you have separate LLCs for each property? And is it common to place each LLC (each property) under one holding/umbrella company?
Thanks in advance