Is there such a thing as group loans?

[James Furlo]

Sometimes, I come across a deal where it makes sense to have more than 1 private lender/investor. So far, I’ve had them all on title at different positions.

But instead of lining them all up at different debt positions, is there a way to “bundle” these folks together? It would look like a single collateralized loan to the property, where each investor gets a prorated return (and right to the collateral) and still receives a 1099 as a lender.

I know I’ll need to work with a lawyer to set up, but I’d appreciate any help to point me in the right direction. Is there a name for this type of “group” loan? Or are there any key terms/phrases I can research?

If you have any experience, I’d also appreciate some of the pros and cons. A huge pro is that I can loan on bigger deals. Or, potentially, open it up to more people with smaller minimums. But I’m not sure about the downsides.

Thanks for the help!