Securities Law

[dvhantiques]

What is the name of your state? NC
I am just starting out as a real estate investor and came upon a strategy of a current investor that I wanted to use in one segment of my investing.
This investor purchases SFH's at 75%-80% of market value. To fund the purchase, the investor advertises in local papers for other investors to fund the purchase with an above average percentage of interest on the money paid to the investor each month for 2 years. The investor's money is guaranteed and backed by the real estate. If payment is not made, the investor can take the property. The property is leased w/option to purchase in 2 years by a tenant with an agreed purchase price.
I have simplified this process to make it brief.
My question is this, would I be in violation of NC securities laws to advertise for investors to fund the purchase of the home with a guaranteed interest rate? Is there a law that says you can only use 1 investor per the purchase of 1 home?
Any advice would be appreciated. Please note I am not sure what state the investor is in who is doing this and has been doing this since the 80's without any legal problems.
Thanks,
Deb

 

[vrzirn]

It is not the legal problems that will bop you on the head but the rock-hard economic ones. You get what you pay for.
Admittedly, I do not know about the real estate market in NC but usually anything you acquire at such a discount from fair market value has something seriously wrong with it. Essential repairs or the rotten neighborhood will quickly account for the difference.
Unless some fantastic probate deal falls in your lap, do not think you are going to turn around a property that has been run-down for years or in a horrible area. In addition, sweat equity costs far mor than you ever would imagine.

 

[dvhantiques]

Foreclosures are at a record high in our area and deals are being made at this percentage. Also, we have many tech and manufacturing layoffs. I appreciate your post, but my question was can one publicly advertise for investors money guaranteed with a high percentage of interest secured by real estate and not be in violation of federal or state securities laws.
Thanks,
Deb