Trustee Sale investing with a fund of other peoples' money- how do I structure properly?


#1

I have been on ForeclosureRadar for about 6 months now, and have successfully purchased and flipped several homes at Trustee Sales. I now have about $500,000 of investor money between 3 different investors who have deposited money with me. I am paying them 10% interest from date of acquiring the money, then I pay 5 ‘points’ on each deal I acquire and they are recorded as a beneficiary when I buy the property and file the Trustee’s Deed. They have been elated at these returns, and it works well for me, too, except it tends to get a bit complicated with whose money I use and the specific amounts I have left of each person’s funds to use on a particular deal, etc. I want to simplify this process and would prefer to just have access to their money without having to record deeds in their names and without paying the points on each deal. The people I am working with are pretty high-trust relationships, and now that I have a track-record I believe they would still deposit money with me without the 1st deed of trust. My idea would be to find more investors in addition to the ones I have and for them to be able to invest the money and leave it with me for a minimum of 6 or 12 months, but be able to give investors a very strong return, like 15% annually. I believe I have people around me who would do this, but I have no idea how to set this up or if it could work. Is anybody out there doing this type of investment fund? Do I need a securities license or something to do this? Is there a good attorney anyone can recommend who can set all of this up for me? I’m ready to get something going on this as soon as I figure out the structure that will work. Thanks so much for anyone who has insight!


#2

Hey, Aaron! Did you get any input & figure out a working structure?? I’m looking to do the same thing out there in CA. Hope you’re killin’ it! :}

johnq@realestate.theofficialjohnq.com


#3

Hi, no unfortunately, I didn’t get much help along those lines. I am having to go a different direction with my investors, basically getting their money prior to a sale and then attaching deeds of trust with one investor per property. It makes it more cumbersome for me than the other ‘pooling’ I was trying to do, but at least I am able to buy properties this way. If you figure anything out I’d love to hear about it. I think it can be accomplished with a Limited Partnership but I really don’t know of anyone using this right now… thanks, good luck


#4

That’s good…I’m glad you’re hear you’re moving forward regardless. Would you mind emailing me so we could keep in touch?


#5

You probably need a CFL license. You should see a transactional real estate attorney who has experience setting up mortgage pools, licensed by the Dept of Corporations. There are at least three firms in California I know who have experience doing these so you can email me if you need their contact info. When you service these loans, you also need a DRE license to handle the servicing to pay the return to the investors.


#6

Julia Thanks for the feedback- it sounds like you understand the situation and have insight. Yes, I would like to get the names of a few firms from you who could give me more guidance and possibly set this up for me. Thanks