When starting an investment group is it best invest as individuals or form some sort of business partnership?

Would like some advice. A group of us are thinking of investing in real estate together and maybe later branching out into more things. Not sure if the best bet would be to individually invest and keep it separate or if we should form a business to do so. Advice? Thoughts? Any professional advice would be helpful.

Make sure you have things written down as to how you will do business, However, be flexible when you need to be. Who will make the decisions when a property is found? Some may say "it's a good deal" others in the group say "no" - who decides? Get everybody input, it will make them feel more a part of the group, then make the decision.

Set the criteria for "what is a good deal" . Make sure you figure your bottom line including taxes, gains, expenses.
If you have a home office, does the "group pay for the paper, ink cartridges, phone calls, gas etc.

I have always been interested in this concept and am now doing a similar thing. Profits are shared as a percentage of your investment. We don't have a set amount each person pays, but rather, how much of the deal do you want?

If the cost of a deal is $100,000. and you put in $10,000 you get 10% of the net profit, if you put in $25,000. , you get 25%. Has worked pretty good. Good luck, you're on the right track. Biggest problem is finding a property that can generate a good net profit.

The advantage to a group is pooling a larger sum of money than you'd have as an individual, and splitting up the research and management tasks. The disadvantage is people getting mad if the investment doesn't go well.

Partnership has its merits and demerits. so also is sole proprietorship. In invesdtment, these indicators operate. what matters is the level of investment. if you think you can cope with the level of expenditure in the investment. go ahead, if you can also cope with your friends along with you go ahead.

It depends. If you feel that all of you have similar investment needs, you may form a partnership (although these days LLC seems to be the vehicle of choice). The additional benefit of the LLC is limited liability.

The problem with this setup is, who will be making investment decisions on behalf of the partnership? More specifically, how would you handle a situation when some members feel a prospective investment is worthwhile while others would not touch it with a ten-foot pole? This is something that you should think of, discuss with your co-investors, and put into the Operating Agreement for your LLC.

Sounds like you ar forming a group and just not sure how to set it up.

If so, always put it in writing! Doing it as a business is the beast way with shares in the business distributed based on contribution.

There are several main benifits for doing it this way.

1) everything is spelled out, so there wont be any misunderstandings, including who makes what decisions, voting rights(for investments) etc.

2) it is a legal entity, so you have recourse if someone walks off with the money.

3)it allows old members to sell out and new members to brought in since it is all transacted with shares in the company.

If you feel you can trust these people not to completely rip you off and you do not have the funds to do this on your own, than yes, an investment group isthe way to go as it pools many more resources