How to properly structure my new business

[Damian LoBasso]

Hello Bigger Pockets!

My partner and I are beginning to brainstorm about the best way to structure a new entity for the purpose of accepting outside investors to fund our flips.  The goal would be to raise capital from friends & family to put towards flipping houses.  Ultimately we plan on shifting to buy & hold, but our 1-3 year plan is to focus on flipping.  

My background is investment banking & private equity while my partner is a corporate attorney (while our backgrounds are very relevant, unfortunately neither of us are well versed in the intricacies of real estate structuring).  As far as real estate experience goes, I have house hacked and owned several buy & holds, while this is the first real estate venture for my partner.  

The reason for the ask is because we have been approached by several family members and friends who have caught wind of our plan to start flipping (all of whom have the means to contribute anywhere from $50 - $200k each), and they would like to participate as limited partners (private money I suppose).  Given our backgrounds, most are seeking to invest primarily on our track around in non-real estate investing, and less so on the metrics of any particular deal.

I'm curious if the community recommends returning all capital and interest at the conclusion of each flip to investors, and then re-raising funds with each new investment, or if there is a way to structure our entity to mirror a REIT, so that we guarantee a particular interest rate, but have the rights to the underlying funding for a set period of time (say 3 years with a 12% annual preferred interest rate).

Would love to hear any feedback or answer questions that might help in forming an opinion one way or another.  Thank you as always!!