First Commercial Deal - Structuring a Fund

[Jeremy Kuchenbecker]

I've had numerous friends and colleagues offer me substantial amounts of money to invest (in one case $1M) and have finally decided to take a serious look at combining some of my funds with my friends and colleagues to purchase an apartment complex. 

Initially I do NOT plan on syndicating, and will rely solely on using friends/colleagues funds for the purchase of 1 property. I'm looking at forming an SPE to hold the funds and secure the loan. Funds raised should be around $200k and will most likely be the only 'fund' set up for the year. 

Most of my questions revolve around SEC rules, protecting myself, and giving full disclosure to any investor. Would this be considered a Private Placement? Then subject to any Reg D rule 504/505/506? Would a private placement be different then setting up a JV LLC, with a GP/LP structure? Would this allow me maintain all financial decisions regarding the asset, without risk of getting sued or removed from the entity?

Sorry for shotgunning questions, any suggestions are greatly appreciated!

[Nick B.]

This would be a private security and you would need a PPM, operating agreement, subscription agreement,  and investor suitability questionnaire at minimum. Talk to a securities lawyer for details.