I have private money investors

[Stefan Arapovic]

Hi guys, I’m looking to invest in my first deal and I have acces to capital from family and friends that live in Europe. I was wondering is there any difference from taking private money from US and what are some things I should be considering before they send the money? Thank you in advance for any information on this.

[David M.]

@Stefan Arapovic

Definitely consult a qualified professional or two.  I would think that if your family members are NOT U.S. citizens they could gift you funds, from the US tax perspective.  Gifters pay the gift tax, but if they aren't US citizens they won't be subject to it...  I have no idea how their country of origin will handle it.

If you do accept the funds, you will need to "season" it in for at least 2 months (i.e. 2 months).  Assuming you go for a conforming loan you will need to show that you have the money.  If the bank/lender sees huge sums of funds showing up in your statements they will question it.  The solution is getting gift statements from your relatives, but that's just more paperwork and who wants more paperwork...

If its all legit, you shouldn't worry about various US anti-laundering laws, etc (CONSULT A QUALIFIED PROFESSIONAL or two).  You might just get asked so make sure you have all the necessary documentation to show that its not "drug money."   If the banking organizations flag the transfers I expect you'd hear about it relatively quickly, I guess a day to a coupel of weeks??  However, keep the docs with your files since the IRS has years to come back to audit you.  

Sounds like you are on very good terms with your family and friends.  Regardless, it might be a good idea to have the amounts and/or expectation written down in black and white.  Doesn't have to be a "recorded document," but just something to keep between yourselves so years down the road its not "he said, she said" situation.  Just like taking meeting minutes...  I'd think even a simple email exchange would do...

Definitely consult a qualified professional or two instead of asking public board.  Good luck.