A good friend of mine recently got a 10 unit in St. Petersburg, FL under contract. Seller financed and around 300k below value. GREAT DEAL! He is needing funds for the rehab and downpayment. How do you network and throw deals out there without getting in trouble with the IRS. I know lender would get second position on property for 550k at 8% interest paid monthly but I am not sure what is breaking the rules and what is safe? If it's not my deal, would it matter?
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
2y
When raising capital, the IRS is not the concern; it is the SEC.
If your friend is strictly raising money, then they would need to follow the rules for one of the Reg D exemptions. Hiring an SEC attorney before starting to raise money would be a good idea.
If your friend is looking for a partner, someone who shares in day-to-day decision making, he would not have to worry so much about SEC rules. Go find a partner to co-invest. He would still need a lawyer to help structure the deal properly.