Hunter Estess is a successful real estate investor in Louisiana. Like many real estate investors, the idea of raising capital to increase his ability to purchase properties is an irresistible allure. However, he knows that without the proper knowledge and understanding of the process, there can be long-term ramifications. You need to be sure you are setup correctly when you are dealing with other people’s money. Here are some things to consider if you are planning on raising money for your real estate investments.
- If you are planning on raising money through a Limited Liability Corporation, LLC, then you have to start by registering your LLC in the state where you will be working. Many investors make the mistake of raising money through a state where they are not properly registered.
- Be sure to draft an operating agreement that details everything. This includes how the funds will be invested, distributed, and managed, as well as any fees that will be paid for the management of the investment.
- Try and work with a partner that is an accredited investor. This means that they have an annual income of no more than $200,000, has a net worth exceeding one million, and who is a general partner, executive officer, director, or other combination for the issuer of the security being offered.