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Updated about 5 years ago on . Most recent reply

User Stats

36
Posts
13
Votes
Richard Davis III
  • Realtor
  • Southeast WI
13
Votes |
36
Posts

Can I have multiple "small" Investors on a deal?

Richard Davis III
  • Realtor
  • Southeast WI
Posted

Most of the Flippers I know use a "shares" method with their PMLs where they sell 1000$ shares of the flip to multiple investors. The investors are paid back their original investment and a profit (Sale price-project costs-management fee) in correlation to their % of shares held. 

I have been told I cannot do this because its too close to syndication. Or that it is illegal in some way. I want to do a BRRRR and only have smaller investors (3 or 4 40k investors). Is there not a way to do this legally or is it too much like syndication. Im not an expert at syndication, but that is what people have told me is why I cant do it.

As an example, 2 separate investors would invest 40k each for a total of 80k into a BRRRR and after the refi I would pay them back separately.

Thoughts? I will likely connect with a local RE Lawyer, but wanted to get a better grasp of things first.

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