Buying into an established deal - how to frame it?

[Patrick Menefee]

I'm getting ready to close on my first property, one that I'm taking on personally. While there is a possibility in the future to refinance and pull some money out of it, ultimately this is a buy and hold that I will leave a good bit of capital in.

In the book Raising Private Capital, he brings up the point of possibly selling interest in an existing property. I've thought about this before, but I don't quote know the logistics of how it would work. Basically I'd take an established cash flowing property and find an investor that would buy into it for a return and possibly an equity stake. I'd recoup some (or all) of my capital, and give up an agreed upon amount of the return.

This brings a couple key questions:

1. Have any of you done this before? If so, how did you sell and structure it?
2. How is this viewed in the eyes of Uncle Sam? It seems like it'd be more closely aligned to a security kind of like syndicating a deal, and therefore be subject to SEC regulation. Is this true? Or could it be structured in a way that mitigates that risk factor?

Thanks in advance for the expertise and insight!