Best business structure when raising funds, open/closed time

[Todd Nagel]

What are the best structures for a real estate investment that includes raising funds from friends and family, investing in multiple single family homes as well as other real estate opportunities and that could be an open time frame or a closed time frame? 

[Greg Dickerson]

Originally posted by @Todd Nagel:

What are the best structures for a real estate investment that includes raising funds from friends and family, investing in multiple single family homes as well as other real estate opportunities and that could be an open time frame or a closed time frame? 

First you need an operating entity that will be the manager of the LLC's as follow. You should keep each property in a separate LLC and use only one investor per property for SFH flips or rentals. You secure their investment with a note and deed of trust and insure the property appropriately. This keeps everything clean and simple and if one property or one investor has an issue it doesn't affect the others. You can even go as far as to have one separate bank account for each property if you are doing the work if not the funds can flow to the seller at closing and the contractor in draws as the work is completed.

I do not recommend using a blind fund unless you have serious expertise and a lot of deal flow. Also that requires SEC filing and compliance and the cost capital is accruing while you search for properties to buy.

Make sure to discuss this with your account and attorney including an SEC attorney to ensure you're in compliance with state and federal laws.