Selling a portion of STR rent as a Note

[Steven Joseph Fogarty]

Hi. Notes Newbie Question for any experts on Notes. Is what I want to do legal, is it a thing, and is there a clever way to structure such an instrument where it is legal?

PREMISE: a STR is net cash flowing $3,000 per month with a $150,000 investment, generating a 24% cash on cash ROI for the investor.

Can the initial investor SELL $1,000 per month net cash flow for a lump sum of $75,000, generating a 16% CoC ROI for the second investor? Can such an investment be structured where the property is owned by an LLC, and the second investor gains 2nd position lien for such a Note.

If this is not a thing, or not legal, I appreciate if anyone can point me to the law (Federal or other) or other regulations that forbid this.

Cuz it's a pretty cool idea, right?

Imagine having a $3,000 per month net cash flow after an initial $150,000 investment. 

You could sell off $1,000 per month for $75,000 giving the new investor 16% ROI, and raising your ROI to 32% ($24,000 annual net cash flow divided by $75,000 capital investment).

You could then sell off the next $1,000 per month cash flow for $75,000, giving that second new investor a 16% ROI, while keeping $1,000 per month cash flow for yourself, and raising your ROI to infinite (no capital in, yet positive cash flow).

If this is not legal, why not?

Thank you Note Masters for educating the newbie.

Steve Fogarty

Las Vegas