Haverhill, MA · Member since 2016 · 1 post · 0 votes
Hello i'm brand new to the world of rental properties to provide semi passive income. I've come up with this vision of creating a small investment REIT, where different people could invest a very small portion of money, starting around $100, for a small share of a rental properties (mostly multi-families) and then get their share of the profits. Would a business model like this make any sense to start up to be able to create a larger passive income? This might all sound like a stupid question, but i've been trying to find companies of this nature and failed to find any.
A better model would grow around an already established individual or group with experience in the rental world & property management. Once you are established, you could then open up a portfolio of rental properties for what you suggest giving others an opportunity to get into real estate investing with smaller levels of funding. To my mind it would be a way of giving back to the community in which you are already successful.
Please review Rule 506(b) regarding raising funds for your deals. If you start soliciting money from people you want to make sure it doesn't constitute a violation by creating a security as defined in this rule. The link is an article to better articulate the rule.
A good rule of thumb is that whenever someone raises money from private investors and then makes decisions on their behalf, a security has been created.