Looking to Create a Buy and Hold Fund

[Alex Stewart]

All, I wanted to get some feedback on starting a real estate "buy and hold" investment fund. I have been in this business successfully for a while (25 single-family units with massive cash flow over 6 years) and think this could present an opportunity to take things to the next level. I have been approached by a few different friends with interest in passively investing in real estate through me and I had previously declined because to this point I have only managed my holdings and was not set up to handle outside investment. I self-manage all of my units currently with the help of trusted contractors. What is a smart way I can raise a round of capital to purchase a block of investment properties I can manage for outside investors? Thanks in advance!

[Allen Fletcher]

@Alex Stewart

Be very careful when you start talking about creating an investment fund. Once you start talking about this you are moving out of small business REI into marketing securities. If you are really thinking about this you need to talk to an accountant that specializes in corporate filings, a lawyer that specializes in securities, and spend some time reading up on both federal and state securities commissions. Once you have done the leg work you will be able to decide how you would like to go about creating your fund legally.

You have a great idea, but you are now starting to tread in highly regulated waters.

Good Luck,

Allen Fletcher

[Jerry Crawford]

I'm thinking through the same expansion plan. In the past I formed my LLC to manage and hold the properties and my friends used their capital to be my lender. I kept them in a 1st position with a deed of trust secured by a single property. They get the interest income. I anticipate they will own a portion of the LLC to get tax benefits and growth. Of course Tax and legal direction will be used.