Best type of partnership for non accredited investors?

[Ola Van Zyl]

Hi guys, I've been researching partnerships options for non accredited investors and feel a little bit confused. Maybe some could help. Can I legally invest in a larger properties with multiple investors who are not accredited but want to invest more than 5-10% of their annual income? Can I do that as LLC created with investors with whom I do not have any previous relationships? Thanks in advance!

[Charles Carillo]

@Ola Van Zyl

Will the investors be active or passive?

If the investors are ALL active, you are setting up a JV (joint venture) and most real estate attorneys should be able to set it up, usually as a LLC. Before setting up a JV you should have a preexisting relationship with these partners since you are starting a business together where everyone will have a role.

If some of the investors are passive, you are now venturing into securities law and syndications. If this is the route you are choosing; you want to read up on Rule 506 of Regulation D and speak to a securities attorney. This is where 506(B) and 506(C) come into play.