Investors vs. Lenders (friends and family)

[Brian H.]

Hello,

I'm hoping to make my first real estate purchase in the very near future, and am trying to understand the benefits and disadvantages of having lenders vs. having investors in my business. I have an LLC and will likely use the money either as a downpayment for a hard money loan, or (if I get enough) do the purchase/rehab outright. I have a list of friends and family that are willing to monetarily support the business in this way.
Initially I was planning to have them lend me (the LLC) money with 10-15% ROI interest paid back to them, probably after one year. Recently I've been hearing about having them as investors in the business instead (as opposed to lending me the money). I'm trying to understand what the advantages and disadvantages are of these two options both for myself and for them. My background is architecture and construction, and I feel I most need to learn more on the business/legal/tax side of the process. Translation: keeping the business structure simple as I start out is helpful for me so I can learn the business, and hopefully keep costs down.

It seems like I may want to start off with the lending for simplicity, and then switch to investors once I have things more established.

Thoughts?