All Forum Posts by: Account Closed

Setting out to approach family and friends for private money for the first time. Have put together a business plan and an LLC. As far as I understand it, real estate-backed notes are not generally considered securities. So as long as I keep my "advertising" to friends and family (pre-existing relationships), can I just give my proposal and presentation to family and friends, and once they agree on something, head to a lawyer to create the note between us? Or should I be going to a lawyer before doing any of this?

I understand this is a legal question, I am just curious as to how other real estate investors have approached doing this.

@Jay Hinrichs

If you give away equity for buy-and-hold investing, do you know how that works for deciding when to sell? Is it just whoever has the majority stake decides that?

@Tapan Trivedi

Good points.

Cool thanks for the interesting replies. Was thinking of proposing around 8%, and could start the talks from there.

I'm talking raising money from people who are not traditional real estate investors.

People who just want a stable guaranteed return for their money from real estate, let's say over 10 years, but don't want to be hands on at all. And you're not offering equity.

What interest would you give them yearly? 

2%? 

5%? 

8%? 

15%? 

Even more?

....Other than 'immediate family and friends'.........?

From what I've read and thought so far, some ideas are...

-getting involved in organizations as a board member, such as non-profit organizations

-making friends with financial planners who have OPM to invest

As I understand it, per the securities laws, you can't make general solicitations, and there are limits to what you can raise, such as one item in I believe Reg. D that says max 35 investors and $5m a  year.

It's a good system. I pulled $40K from credit cards at 0% interest for a year. Have the numbers and exit strategies all well-thought out so it feels good.

@Stephanie Dupuis Totally agreed, trust is so essential to any relationship, personal or professional. For me, that's the foundation of any relationship. If someone breaks it, and doesn't profusely apologize and explain, that relationship is highly questionable.

I've learned also that I'm too much of a nice guy. There's a lot of merit in letting people know you have a bit of an attitude, will not be pushed around, and will triple-check and cross-verify everything they do (especially in real estate) and will not put up with any bs. Never thought I'd have to do all that stuff, but people respect you so much more when you make it abundantly clear you're not a pushover.

Thanks so much all for the great advice....lessons learned....don't necessarily rely on agents to watch out for your own interests....finding a good agent is a process....don't get distracted by everyday stuff in real estate.....and it's good to come on here and get objective advice about situations!

By this point….yes to all 3 of those questions.

Ohhh OK, I didn't realize that it looks like through a quick online search that signing a buyer's agent agreement is absolutely essential.

Otherwise the buyer's agent is working as a subagent of the listing agent, and discloses your information to your own detriment - is that correct?

So it seems like at this point, I should just start over w/ a new agent and w/ a buyer's agent agreement?

He's submitted one offer before for that got rejected, but no, he's just working on a commission basis