Specified, Blind Pool, Fund of Funds, or Segregated Offerings— Which Type is Right for You?

NOTE: This article pertains to Private Placement Securities Offerings. The information provided is for educational purposes only and is not to be relied upon as specific legal advice. You should consult a securities attorney before deciding which of the following options—if any—is right for you and to advise you on the appropriate legal documents and regulatory filings that will be required for your offering.

Which Offering Type is Right for You?


As you go through the process of creating a securities offering to legally pool money from private investors, you will need to make many decisions—one of which is which type of offering to select?

Specified Offerings

This option is for the person who has one or more commercial properties under contract, but needs to raise money from private investors to cover the down payment (if bank financing will be used) or full purchase price, closing costs, due diligence expenses and acquisition fees. The Specified Offering works best for new syndicators who don’t have an established track record with this type of commercial property, or for those who want to match individual investors to individual properties.

In a Specified Offering, you typically use your own money (or funds from a member of the management team) for deposits, due diligence, legal fees, etc., and you don’t use investor funds until you are ready to close on the property. Here is why: if you don’t close and you’ve used investor funds you can’t pay back, you will likely no longer be in the syndication business. Once you close, you can be reimbursed for your expenses and pay yourself an acquisition fee, providing you’ve raised sufficient funds from investors.

For this type of offering, you will prepare a Property Information Package (aka Investment Summary) to accompany the legal documents drafted by your securities attorney. This is the easiest way for a Syndicator to raise money.

Blind Pool Offerings

This option allows you raise money based on a business plan (Investment Summary), which should narrowly describe the type of properties you intend to acquire, your proposed exit strategies and how you will generate a return for investors.

You will establish a minimum and maximum dollar amount for the offering. The Blind Pool Offering works best for people who already have an established track record of Specified Offerings with the same type of properties described in the Blind Pool business plan.

A Blind Pool “Fund” will allow you to raise money in advance of identifying specific properties to purchase. You may also use company funds for deposits, due diligence costs, legal fees, etc., prior to closing on any property.

The benefit to investors is risk diversity, in that losses from one property can be offset from gains by other fund properties. The benefit to you as a syndicator is not fronting your own due diligence expenses and having ready cash for a quick close.

Deal flow is key, however, as once you raise the money, you need to get it placed fast in order to generate returns. Further, there are plenty of Blind Pools that never get funded, while most Specified Offerings do. The most successful Blind Pool funds are launched after conducting four or five successful Specified Offerings within the same asset class.

Fund of Funds Offerings

A fund of funds is an investment vehicle that allows you to pool funds from your own group of passive investors into a single company that in turn invests in other companies. The alternative is to refer your investors directly to others’ deals, but the problem with this is that you lose control of your investors. The investors you refer are often marketed for future investments by the management of company they invested in.

Your Fund could be structured as a ‘deal by deal’ fund with certain investors investing in specific deals; or it could be a Blind Pool Fund, as described above.

But there are a couple of regulatory considerations you need to understand if you are contemplating the Fund of Funds model:

  1. Your fund of funds must comply with an exemption from the Securities Act of 1933, such as Regulation D, Rule 506, and you will need your own securities offering documents, such as a PPM, operating agreement, subscription agreement, and securities notice filings.
  2. You must also comply with the Investment Advisers Act of 1940. Because your fund is not directly owning and controlling real estate, and you are buying “securities” in others’ deals, which requires you to initially register with the SEC as an “exempt reporting investment adviser”, and may also require that you register (or become licensed) as an investment adviser in the state where you are located. Once you achieve $25M in assets under management (AUM), you must comply with further licensing and registration requirements with the SEC, which means someone on your team may have to get an applicable investment advisers license and become a “registered investment adviser.

 Segregated Offerings (Deal by Deal)

In a Segregated Offering, we will create a Series of separate offerings under a Master PPM and business plan. The business plan will describe the criteria for the properties you plan to acquire, but each property acquisition will be treated as a separate offering — with each having a separate investment purpose, separate investors and its own securities filings.

The upside is that you can save some time and legal fees, as we don’t have to draft a new PPM for each new investment.

However, unless there is a 30 day capital raising break between each offering, the offerings will be considered to be “integrated” (all part of the same offering), so if you are doing this under a Regulation D, Rule 506(b) exemption, any non-accredited investors in your separate offerings will be aggregated toward your 35 non-accredited investor limit.

For example, if you have 10 non-accredited investors in one separate offering, 15 in your next separate offering, and 5 in another, then you only have room for 5 more in your next separate offering  before you have to limit any future separate offerings to accredited investors.

This offering type can work for Syndicators who want to buy a series of single-family or smaller commercial properties with raises of only a few hundred thousand dollars, and fairly constant deal flow. For bigger offerings where you are raising $500,000 or more, a Specified Offering may be a better option as that is what will be expected by you r investors.


Determining which of the aforementioned options is right for you is a discussion you should have with your securities attorney, who can advise you on the pros and cons of each scenario with respect to your experience level, track record and property type.


Are you ready to raise private capital?

At Syndication Attorneys LLC, we are committed to your success – book a consultation with one of our team members today!

Are you ready to raise private capital?

At Syndication Attorneys LLC, we are committed to your success – book a consultation with one of our team members today!

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Are you ready to raise private capital?

At Syndication Attorneys LLC, we are committed to your success – book a consultation with one of our team members today!