Rules for receiving funds for private money loans

[Elliot Tan]

Hi everybody! 

My partners and I are starting a REI company. We will be flipping and purchasing rental units. Goal is to slowly scale into medium-sized multi-family apartments. Our strategy for funding is to find private money lenders to fund our flips and rental units, then cash-out refinance the rental units in order to pay back our private money lenders (BRRRR). We are starting out with our immediate circle (ie friends and family). Then as we get better at the REI game, we will look to expand our network of PM lenders as we do bigger and bigger deals.

I have several questions in regards to the rules and regulations of receiving funds for a private money loan.  I haven't been able to find any concrete answers to several of my questions.  So I've come to you all for help!

1. What's the difference between syndication and private money borrowing?  I can't seem to find a straight answer comparing the two.  From all the podcasts and articles/books I've read, I get the feeling there is a difference.  Just not sure WHAT the differences are, and WHY I need to differentiate between the two.

2. Can I simply receive funds from a private money lender transferred directly into our business bank account? What is the typical route we would take when it is time to receive the funds in order to purchase our deals?

3. We plan on using a promissory note from here: https://eforms.com/promissory-... . Is this good enough, or do we need something more? What other documents would we need in order to protect our lenders and ourselves?

4. Here is an example scenario: we find a property for $100,000 that we intend to flip.  Rehab will be $20,000.  We cannot find 1 individual to loan us $120K.  But we are able to find 6 friends/family to loan us $20,000 each.  Is it legal to create a promissory note with each individual, then pool all that money to fund our flip?  If it is legal........how do we then get that money to the seller, closing attorney, agent, contractors, etc...in order to successfully complete the flip?

I understand the CONCEPT of private money lending.  But the MECHANICS of it all is where I'm coming up short in understanding.  Thanks so much for taking the time to read my questions!  My partners and I will appreciate any and all advice given in regards to private money lending! Take care.