Establishing Private Investor Group: Help Wanted!

[Ian Turner]

I’m in a small, tight-knit community where residents are interested in local real estate investing but lack the time/energy/youth to actively engage.  Due to my growing business and local success, I’ve been approached by multiple private individuals (NOT real estate investors) who have some money they're interested in investing to help launch more projects and are not looking for hard money lender type returns.

We like the idea of assembling a group of local private investors to keep terms favorable and simple.  Let’s say we have 4 investors with $100,000 each.  How can we structure this in a way that affords us the capability to use this fund for capital improvements while keeping it simple?  Can we structure 4 identical loans with these friends/acquaintances, agree to a fair interest rate, reasonable payback/cash out terms, etc?  Are there laws we need to be aware of and what are some pitfalls to avoid?