Apartment Purchase with 35 People

[Justin Yurong]

I've been working on putting together a deal with my friends, family, coworkers, etc. They would all be considered sophisticated investors. As of right now, I have an informal commitment of funds of $180,000 with 35 total investors (including myself). 

The quick and general idea is to purchase a small apartment building (5-16 units) in the Fresno/Clovis area of California, and everyone's ownership interest is proportional to the amount of funds they contribute. I wanted to structure it as an LLC, so that each investor would have limited liability unless they are going to be a guarantor on the mortgage.

I'm in contact with a commercial mortgage broker and lender, and it seems like lenders may require 60% or more of the LLC ownership to be guarantors (12 people, for this particular group). Ideally, it would be me and 1-2 other investors to be guarantors of the mortgage, not 12.

Has anyone had any similar situations? Have you found a better way to structure the entity so that not so many people would be guarantors risking their personal assets? Or, have you found ways to negotiate with commercial lenders to accept less guarantors?

Any piece of advice helps.