I heard that to accept capital from investors into my QOF, I need to create PPMs and operating agreements. What are other critical SEC rules I need to follow? Is there a way around this? What if I create a QOF but only invest my own money?
You do not need to follow any securities laws if you are only investing your own money. But when raising money from others, it is critical to consult securities counsel. Not only will you need to follow federal securities laws, but you'll also need to navigate state securities laws.
If you invest only your own money into the deal, there is no requirement to provide PPM disclosure to yourself. There is no friends and family exception to creating PPMs, but certainly parties that are comfortable partnering with others they know can still partner in a real estate deal without a PPM. The PPM protects against rights of rescission by the investor of their investment for failure to material disclosure. A SCOR Form U-7 in many small offerings can provide material disclosure to investors. If you think anyone in a small investment group might later sue you if the deal does not go as planned, at a minimum, I'd complete a SCOR Form U-7 and provide to all investors in the deal. Doing so is good practice and may alert you to some considerations you might not have thought of otherwise.
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