Do I need a PPM?

I want to bring investors into a passive ownership position in my LLC that will purchase and run a multifamily property. Do I need to create a PPM for this, or will the operating agreement be enough to make all the proper disclosures and list the risk information?

If your group is hoping to make a profit solely from your efforts, you've probably created a security. In that case, you need to get an exemption from filing with the SEC. If you, your property and all your investors are in the same state, you can get an intra-state exemption by filling out the correct form for your state's security division. If you have people or parts in more than one state you can get a federal exemption by following one of the 3 rules in SEC's Regulation D. Most likely you'll need to provide your investors with a disclosure document, which is the first of three parts of a PPM. The operating agreement for your LLC is the third part, but alone will not give you the exemption.