Posted by John Corey on May 30, 2006 at 07:08:15:
Ben,
You need legal advice from a lawyer that handles securities.
You are talking about creating a fund where you have control over how the funds are invested. This means the fund needs to be registered with the state and the SEC unless you fit some very specific exemptions. Even with the exemptions you still have specific disclosure requirements.
Have you posted the question to the legal forum?
John Corey
Alternative to Creating a REIT - Posted by Ben
Posted by Ben on May 30, 2006 at 01:01:12:
Several individuals I interact with have expressed interest in having me invest some of their available liquidity into real estate on their behalf. While I feel capable of handling a few individual investors with whom I have a personal history and trust is not an issue, I am interested in creating a structure that allows for me to pull in funds from many investors that offers them security while avoiding heavy regulation but remaining aboveboard. Is there a way to use an existing LLC for this purpose? If not, what would be the best way to move forward?
Don’t re-create the Wheel - Posted by Jimmy
Posted by Jimmy on May 30, 2006 at 08:16:21:
Corey is right on. The minute you take the responsibility of investing OPM, you enter the securities world. There are attorneys out there who do this stuff every day. Don’t even think about doing it yourself. You need a structure that protects YOU in case the deals go sideways or down the drain.
A private REIT is a possibility, if you have net assets of $10M or more. The tax compliance for these animals is very expensive, and very few accountants out there know how to handle it. The ones who do are Big 4 guys (or used to be).