I invest about 1-2x/year in syndications but have noted that the minimums have risen steadily over the past couple of years, resulting in being priced out of many funds and lacking in diversification of syndicated deals. Several friends/colleagues and I have started a general investment interest group and through this others have expressed interest in starting investing in syndications. We are all physicians but in a field that is considered "lower compensated" in medicine (Pediatrics) so it is hard to come up with some of these larger minimums, and some are not as interested in having such a higher portion of their investments dedicated to real estate, but still want the diversification. My idea would be if 5 people wanted to put in 20k each, we could invest 100k in a fund, or possibly reach a higher level on a syndication which may result in a better distribution pay-out.
What would be some of the true business/tax challenges others foresee in creating a multi-member LLC with other accredited investors so that we can pool have multiple members pool money together to invest in these 6-figure syndications and funds? I foresee this as potentially developing into a side-business over time and possibly creating an investment company focused. One challenge I suspect would be the state tax implications we would each encounter if investing in multiple deals per year in multiple states. The "smaller" investments would have a larger chunk of the yields eaten up in costs associated with tax filings. However, if we focused on specific states or funds, it may be less of an impact. There is the obvious personality difficulties which with the current group, I am not concerned but if this were to grow could become an issue. I would hire the appropriate CPA/lawyers to make sure all the legal documents for the LLC, distribution of funds, etc. were accounted for and had appropriate oversight, which again would eat into yields.
I am happy to consult the appropriate professionals but wanted some general thoughts. as I haven't seen discussion on this when searching except for smaller LLC with just 2-3 partners. I am not sure if I am missing something obvious to why this wouldn't work, or if there is some other better way to create an accredited investment group.
