"Syndicated Loan" - is this a thing?

[Nicholas Morgan]

Hi everyone, 

I've asked a similar question a while back, but I don't believe I clearly defined my goal and I am now re-asking with more clarification...

Here's my goal: get a loan from multiple individuals that sums to the amount I need. Use the loan to purchase a property with cash and follow the BRRRR strategy where I ultimately pay the private money loan back after performing a refinance into a conventional 30yr fixed loan.

Example: create a loan of $100k where 5 individuals each lend $20k. The loan could be an interest only payment, 12% interest, and 1 year balloon. 

What's the best way to create a loan like this? 

Here are my thoughts, please let me know what you think : 

• Create a multi-member LLC where each lending individual owns a % equity of the LLC proportional to the amount of money they transfer to the LLC
• Create a business checking account where LLC members deposit their money
• The LLC lends the money for property purchase and the LLC has a 1st position lien on the property
• The LLC operating agreement defines that if I do not fulfill my responsibilities of loan payback and 75% (or some value) share of the LLC decides to foreclose on the property that the property will be foreclosed upon, sold, and the profit will be dividing among the LLC members proportional to their equity in the LLC

What is wrong with this idea? I am calling this a syndicated loan as it reminds me of syndication, but I'm not promising a return based on an asset performing - I'm just setting up standard loan terms. The goal is to pay the loan back in 7 months or less when I refinance into a conventional bank-backed loan. 

Any advice would be very much appreciated!

Thanks,

Nicholas