Selling Fractional Ownership in Rental Properties

[Jack Victory]

Apologies if this is a topic that has been covered or is more appropriate in a different section but I am looking for information about selling fractional ownership in rental properties. Most of the information I have found pertains to timeshares versus rental properties. Can anyone provide some basic guidance or references pertaining to this subject?

To expand on the question, from a legal and business perspective, what are the considerations and/or limitations in the following scenario:

Bob buys the property at 123 Main Street through a business entity in which he is the sole managing member, ABC LLC. The property is bought for $100,000 (80/20 LTV) with a traditional mortgage and then transferred to ABC, LLC but personally guaranteed by Bob. For $10,000, Bob offers Joe and Mike, respectively, 10% stake in ABC, LLC in return for a proportionate share of the rental income and appreciation.

Joe and Mike have the potential to earn a respectable return on their investment without the headaches of solely owning or managing rental properties and Bob has recouped his initial investment while retaining 80% stake in the property.

This seems like a reasonable model but I have not found much information out there about similar ventures and I am sure there are a number of issues I am overlooking, i.e. securities laws, accounting complexities, etc.

Any help or guidance would be greatly appreciated.