SEC, Regulations, and other peoples money (OPM)

[Jacob Huston]

Hello all, newbie here with a question for any RE attorney or veteran of using OPM for purchasing real estate. 

Suppose that I have a deal sitting on my desk but no money to fund it. I have a personal relationship with someone who has the money to fund my deal, and is looking for deals. Suppose that I want to offer them a preferred return on their invested capital and then split what is left over according to a negotiated split percentage. At this point would I be considered to be marketing a security to them? Presumably that comes with some required SEC fillings and additional regulatory concerns. Or am I in safe harbor under 506(b) since I have a personal relationship and am not publicly marketing the deal. Any information or direction to where I can read up on this is much appreciated. 

Thanks yall.

V/r,

Jake

**This post is a request for information only. Nothing in this post should be taken as a solicitation. Any inquiries about the specific deal will not be responded to.**

[Jerel Ehlert]

Based on what you describe alone, the classic attorney response "it depends" applies.

Setting up a securities offering should run $25-50K, so for small deals that doesn't make economic sense.  

A note/lien makes more sense but you still have to overcome the presumption of an investment contract (among other issues) if you do an equity kicker.  That answer has to match the facts of your deal.