Structure for funding deals with investor's money

[Steve Vu]

I know a few people who have shown interest in funding some of my future deals and I was wondering what was the best way to approach this from a legal/tax standpoint. Ultimately, I know I'll need to talk to an attorney, but I wanted to get a general idea first and do more reading on it. 

I have two scenarios I want to address:

1) They fund 100% of the deal as a loan. 

and

2) They want me to manage their money and invest it for them in real estate.

What vehicle would I use to have them transfer me the money, without incurring taxes? I don't want the IRS to think that I am getting "free" money as gifts, laundering money, or anything of that sort. 

Am I allowed to just have them wire me the money to a separate bank account (intended exclusively for funding deals like this) or is it better to create an LLC with a new bank account? If an LLC was required, would I be allowed to run both scenarios under the same LLC?

Is there any particular documentation required for either scenario?

I may be completely off base, so let me know if there are other ways to run this. Thanks!

[Curt Davis]

You should go with option 1.  They will wore money to the closing attorney and get a 1st position lean on the property.  

Your closing attorney will know how this should be done. You dont have to have an LLC for option 1. You will never touch the money, it will all be handled through the closing attorney.