Multiple Investors (take 2)?

[Michael G.]

So, a while back I posted a question about having multiple investors all making small investments to my LLC. That sounds like it's really hard to set up because of the SEC rules.

I have a different idea I wanted to see if anyone could help me with.....

I have 2 people that are willing to invest about $50k each and I would bring $50k to the table as well.

The goal of this partnership is to use that money to either directly purchase rehab properties or as money to bring to the table for lager property deals (to make up the 20% skin in the game that lenders need for a mortgage commitment).

My business partner and I already have an LLC that manages our existing properties. We want to keep using this LLC as the main entity.

We are thinking of creating a separate LLC or LP as the investor entity that would provide funding (and that would probably be a second position lean holder on the property).

The main entity would be the property owner and would pay the investor entity x% interest (probably like 11% or so). The main entity would pay off the monies used in 2 years and then the investors would be off the property (probably would require and closing).

1. Is this common?

2. Is this legal (I guess that is tied to #1 above)?

3. What is the best way to set this up? We are going to talk to our lawyer about this but, if this is common, what are some general things we should keep in mind?

Thanks