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 what type of offering to select.

Specified Offering

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 to accompany the legal documents drafted by your securities attorney. This is not the preferred method for single-family acquisitions, as the legal fees are usually disproportionate to the amount of money needed. Therefore, other private money options such as private loans, Blind Pools or Semi-Specified Offerings should be considered for single-family acquisitions.

Blind Pool

This option allows you raise money solely on your business plan or Investment Summary, which should narrowly describe the type of properties you intend to acquire, your proposed exit strategies and how that 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 established a successful track record of Specified Offerings with the same type of properties described in their business plan.

Since you will be raising money in advance of identifying specific properties to purchase, you usually can use company funds for deposits, due diligence costs, legal fees, etc., prior to closing on any property. Your investors, however, would need to understand that this money may be at risk if you don’t close on any property and can’t get some of it back, or you could agree to treat such funds as a recourse loan that you would personally pay back if you didn’t acquire any properties.

The benefit to investors is diversity of risk, while the benefit to you as the 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.

Semi-Specified Offering

This option is a hybrid of the previous two. It requires that you have at least one property under contract, as in a Specified Offering, as well as a business plan that describes criteria for additional properties (which should be similar to the one under contract) that you plan to acquire under the same offering/company. A Semi-Specified Offering allows you to raise money to close on the property under contract, and then continue raising money while investigating additional properties to acquire, per your business plan. In this case, you would prepare a Property Information Package and a business plan to accompany the legal documents drafted by your securities attorneys. A prior track record with the specified property type is advised before embarking on this type of offering. This offering type can work for single-family or commercial properties.

Segregated Offering

This option is another hybrid of the previous two. For 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 — so it can have a separate property, separate investors and separate securities notice filings. For each new property you get under contract, we draft a separate PPM Supplement and Subscription Agreement, form the Investor/Title holding LLC and draft its new Operating Agreement, and we do separate filings with the SEC and State Securities agencies.

The upside is that you can save some legal drafting fees and drafting time for subsequent Separate Offerings, as we don’t have to draft a whole new PPM each time. However, the downside is that you have additional documents (the Master PPM and Business Plan) to show investors — and it can get a little confusing for some of them who are used to seeing Specified Offering Packages (that consist of the PPM, Operating Agreement, Subscription Agreement and Property information you provide).

Additionally, the SEC will likely consider a series of Separate Offerings under a Master PPM to be “integrated,” so if you are doing this under a Regulation D, Rule 506(b) exemption that allows up to 35 Sophisticated Investors, the Sophisticated Investors in each Separate Offering will be aggregated toward your 35 Sophisticated Investor limit. For example, if there are 10 Sophisticated Investors in Separate Offering A, 15 in Separate Offering B, and 5 in Separate Offering C, then you only have room for 5 more in Separate Offering D before you have to completely start over.

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. For bigger offerings where you are raising $500,000 or more, a Specified Offering may be a better option.


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!