I have private money investors but don't want to go to jail

[Shaun Futch]

I have friends and family willing to invest $100,000 each in private funding for me to buy rental cash-flow properties however I don't know how to set up the money transaction in a way that pleases Uncle Sam. They certainly can't "gift" me that much money. Is there a cookie cutter form or contract that sets up the private finance deal and tax requirements? Do I need to just set up an LLC with them as a 50% owner and just have money flow that way? or am I heading in completely the wrong direction?

[Kenneth Garrett]

@Shaun Futch

You should hire an attorney to protect everyone's money especially family. There are multiple ways to structure the funds. Note and mortgage, JV Agreement, LLC or a combination of all of these. I have done all of these. I think it's better to have them commit to a project and create a note and mortgage that way the property serves as collateral and they are the first lien holder.