SEC Regulations When Working With Partners

[Brad Cornell]

Hey All!

My wife and I became RE investors last June when we bought a 4-unit that we are house hacking. Since then I’ve been hunting for more deals like a mad man and educating myself through books, BP, and meetups.  We’re now walking down the path of working with investors to do more and bigger deals. We’ve built a decent size network of investors and have about 500K available to work with at the moment with more available once we prove the concept. We’ve learned a ton moving this direction but I seem to be hitting a few roadblocks that I was hoping you all could help me with. 

Here's the scenario- I have four investors that I have previous relationships with, some friends and some family.  They see that I'm doing well with small multi-family investing and have said "if you find a good deal let me know and I'd love to invest."  They are looking for 3-7 year commitments and want ownership stake in the properties.  I would be the deal provider and manage the day to day operations and any rehab as well as tenant management while they would basically just inject cash.  We're looking to mostly do small to medium sized multi's for now.

The question is this, do I need to file with the SEC or is there a way to legitimately do it without the deal being a security?  I've heard several different thoughts and ideas about this entire thing, I've ready "Raising Private Capital by Matt Faircloth," scoured the forms and watched a lot of YouTube videos, but haven't gotten very far.  I'm hoping you amazing people can shed some light with your experience.