Raising Money From Private Investors

[Nick Lippe]

hello everyone! 

I'm currently looking to purchase a 6 unit property in Chicago IL. I have a couple folks who want to invest and essentially put enough money in to pay for the down payment + closings costs. They would of course want a percentage of the LLC created. we are still working out the details but I believe we agreed that both investors would get 20% each for their investment giving away a total of 40% of the business.

I'm looking for some guidance on how you would pay investors back and of course make it worthwhile. I know there are some creative ways and seeing as there's tons of experienced investors on this site I'd figured id ask! 

Any feedback would be greatly appreciated. 

thank you in advance!

[John Warren]

@Nick Lippe the big issue you are going to run into is that a six flat probably isn't worth syndicating. If you are truly raising money, then you have to hire an attorney for 8-12k to set up the paperwork, and you also have to spend a ton of time keeping track of things. 

I would either have a JV partnership where one partner is more focused on the capital, financing, etc, OR i would have them be debt partners where they are lending the LLC money for a fixed return. Essentially, they are second position but not owners of the real estate.