REIT or Investment Group Question

I have been actively buying and selling properties for the past couple of years here in California full time under the following scenario:

1. I do all the market research
2. I find and negotiate all the properties
3. I open and follow each escrow
4. I close each escrow
5. I then put the property back on the market
6. I find a buyer for the property
7. I open and follow the sale escrow
8. I close the sale escrow and deal with any problems.

I do all the work; the investor puts up 100% of the money.

Once the property has been bought and successfully closed, we deduct all the costs of the transaction and the net profits are split 50/50

I would like to set up a small investment group or REIT (whichever is simpler) where investors can put their money into the “group or REIT” and be guaranteed a certain return on their investment, but without actually going on “title” or having a lot of control or input into the deals.

I am in California and so far all the properties we have done have been in California.

I want to keep this as simple and uncomplicated as possible, while at the same time offering the investor a high degree of protection on their investments.

Please let me know your thoughts and where you might direct me for some legal and financial help.

Please feel free to call me if needed.


Dave Roekle

Sounds like you first need to register with the Securities and Exchange Commission. REITs fall under securities regulations.

Howdy Dave:

I would just do a simple partnership. Filing with the SEC and starting a REIT ain’t cheap. You can also form a LLC which is very popular today. You want to be able to limit the investors liability to their investment.

I am considering the same scanerio in North and South Carolina. The research I have done so far suggests using private placement money to form A partnership of some description to escape REIT requirements which are complex. Any suggestions from the group would be a plus.

I like to subscribe to the KISS principle- Keep It Simple Stupid! A REIT WAY overcomplicates things. Like others have suggested, just set up a partnership…

Use a limited partnership. Otherwise, you expose your investors t unlimited risk.

I myself am located in California. I am based out of Los Angeles and work with consulting and larger apartment complexes. We are registered with the State as a LLC.

Contact the State, the fee is $70.00

Also check, you may need to file for a FBN. That fee is $23.00

Don’t hesitate to contact me if you need help or have any questions.