If money is invested in PML co., is ROI taxed as ordinary income or Capital Gains

[Thomas Strimple]

I have a PML LLC and this year started to invest other people's money in RE besides my own. Is the money they make taxed as ordinary income or as Long or Short Term Capital Gains.

EX: John invests $100K in my company (not through a self directed account and he is not made part of the company in any way). I put that 100K in three deals (each 4 months long and in consecutive order) over 12 months from Jan through Dec and John gets a return of 19%. John rolls over his 6% ROI from each deal into the next deal. There have been three completed "payoffs" (internally in my company) but John has not taken a payout. Is John's "paper income" of $19,102 taxed as a Long Term Capital Gain at the end of the year or is it just ordinary income taxed at whatever his rate is personally?

If not LTCG, is there a way to make it a LTCG?  Would that not be the most advantageous for John?

Thank you,

Tom