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Syndication Basics

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What’s in a Securities Offering?

A private placement securities offering includes a number of documents, which collectively comprise the offering package. Each document has the specific purpose described below: The Private Placement Memorandum The private placement memorandum...

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Should You Really Start a Fund?

We get potential clients who reach out to us every week who want to start a fund. While we could simply take their money and set them up with fund offering documents, we actually talk a lot of people out of doing a fund. Why? Because they don’t...

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How do I Create a Substantive Relationship?

Question: If I am doing a 506(b) offering, do I still need a pre-existing substantive relationship before I can solicit from an Accredited Investor (AI)?  If “yes,” is there still any waiting period after I get that Accredited Investor to sign a...

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What is Real Estate Syndication?

If you have a self-directed IRA or substantial investment funds, you probably have considered investing in real estate. But perhaps you have concluded that you lack the funds to invest on your own. Or maybe you simply don’t want to deal with the...

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What’s in a Securities Offering?

A Private Placement Securities Offering includes a number of documents, which collectively comprise the Offering Package. Each document has the specific purpose described below: The Private Placement Memorandum The Private Placement Memorandum...

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How to Structure a Real Estate Syndicate

Although there are numerous ways to structure a commercial income-producing property, the following model describes a typical 2 Class syndicate with equity Investors and a separate management entity. How to Structure a Real Estate Syndicate In the...

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506(b) or 506(c) – That is the Question

First there was Rule 506, under which investors could claim exemption to the requirement of registering securities. Subsequently, in its July 10, 2013, meeting, the U.S. Securities and Exchange Commission (SEC) adopted the new Regulation D,...

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Advanced Basics

How to Name the Entities in Your Syndicate

If you are a syndicator, you should pick a naming convention for all of the entities in all of your syndicates and stick to it.  You can have as many as five entities in a syndicate, but most commonly, you will only have two. If you can figure...

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Class B Catchup Distributions Explained

When you are syndicating a cash-flowing property, you must determine how you will distribute cash to your investors at various stages of your company. This is called a “waterfall”. At a minimum, you will need to determine the waterfall for cash...

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Paying Finders Fees in a Real Estate Syndication

Question: What are the rules regarding paying unlicensed “finders” to refer investors to a real estate syndication? The Issuer Exemption Under Regulation D, Rule 506 Since passage of the National Securities Markets Improvement Act of 1996 (NSMIA),...

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Do I Need A PPM Lawyer To Draft A PPM?

"Do I need a PPM attorney to draft my securities offering documents? And when do I need a PPM?" The first question is akin to asking whether you need a surgeon to perform brain surgery. After all, everyone has a knife in his or her kitchen and...

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Other articles

What’s in a Securities Offering?

A private placement securities offering includes a number of documents, which collectively comprise the offering package. Each document has the specific purpose described below: The Private Placement Memorandum The private placement memorandum...

read more

FINCEN is Coming to a Lender Near You

Don’t Let the Corporate Transparency Act  Prevent Your Loans From Closing! The Corporate Transparency Act, which takes effect January 1, 2024, requires obtaining and reporting identifying information to the United States Financial Crimes...

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Is Your Offering Viable? 

How can you tell if your offering is viable? You must overcome two hurdles in order to have a viable offering:   Is it legal?Is it marketable? Hurdle 1: Is Your Offering Legal? The first hurdle — “Is it legal” — is easily answered: If you...

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Don’t Blow Your Securities Exemption!

Federal and State Notice Filing Requirements NOTE: This article specifically pertains federal and state-required filings for exempt securities offerings under Regulation D, Rule 506. This information is not applicable securities offerings under...

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Fund of Funds Checklist

Have investors but don’t have a deal? This structure is useful for people who know investors but either don’t have deals or want to invest in others’ deals. Here’s a checklist for a “Fund of Funds.” Sponsor Sets up Their Own Fund: Uses U.S. or...

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Should You Really Start a Fund?

We get potential clients who reach out to us every week who want to start a fund. While we could simply take their money and set them up with fund offering documents, we actually talk a lot of people out of doing a fund. Why? Because they don’t...

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SEC Updates & Multi-Family Syndication Trends

In our December 2020 free educational webinar, attorney Kim Lisa Taylor provided details of recent SEC actions and proposals that have positive implications for capital raisers. Unfortunately, we encountered technical difficulties with the...

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Debt vs. Equity Offerings

Finding it difficult or confusing to understand the difference between debt and equity financing? Simply stated, debt securities are loans that pay out interest over time, while equity securities confer ownership in a company (think about this in...

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What to Know About Preferred Equity

What is Preferred Equity? In the context of this article, Preferred Equity simply means a particular investor who will receive different or priority returns than other investors. Preferred Equity typically comes from Family Offices, Insurance...

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Avoiding Fraud in Syndication

Syndicators Beware — Your Livelihood and Reputation are On the Line if Fraud Occurs in Your Syndicate Fraud is a constant risk in any kind of transaction but even more so in a real estate syndication, which involves pooling funds from multiple...

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Which Fund Structure is Right for You?

There are multiple ways to set up a private equity fund. The most common types are described here. FUND STRUCTURES Whole Fund Model Under the “Whole Fund” or “Blind Pool” model, investors purchase interests in a pooled investment fund (the Fund),...

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How and Where a Syndicator Can Network for Investors

Meeting—and then developing meaningful relationships with—investors is key to your success in real estate syndication. Here is insight on how to accomplish that. Regularly Attend Local Events Sam Freshman, author of the book, “Principles of Real...

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Navigating Private Lending Laws

Question: What laws apply if you are raising funds from private lenders to: a) fund your real estate investing or private lending business, or b) if you are loaning their funds to others? When Securities Laws Apply If you are borrowing or pooling...

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Opportunity Zones for Syndicators

By now many taxpayers have heard about Opportunity Zones enacted under the Tax Cuts and Jobs Act 2017. As a quick recap, the objective of Opportunity Zones is to spur economic growth in underserved areas by providing tax incentives to investors in...

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What is a Fund of Funds?

A fund of funds is an investment vehicle that allows a syndicator to pool funds from a group of investors into a single company that invests in other companies. In order to pool other people’s money, you need two things: A company that can accept...

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How to Get More Investors for Your Syndicate

Deciding on an idea for your startup company or real estate deal is just the first step of many on your way to success. In this white paper, we’ll focus on one of the most important steps: Identifying and using the tools you need to market yourself...

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Crowdfunding: A Guide to the Basics

CROWDFUNDING YOUR OFFERING What is Crowdfunding? Crowdfunding is simply a method of legally advertising a securities offering via the Internet or other means. The JOBS Act included provisions (Titles II, III and IV) that allow direct advertising of...

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HUD Loans For Construction, Rehab & Refinancing

Little-known to most real estate investors, the Federal Housing Association (FHA), in conjunction with the U.S. Department of Housing and Urban Development (HUD), collectively offer mortgage insurance programs for both apartments and health care...

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To Be Accredited, or Not to Be Accredited

Why Does it Matter and How Does One Get Verified as Accredited? When must investors in a syndication deal be Accredited, and when can Non-Accredited Investors participate in the opportunity? Sometimes the answer is not clear-cut, which is why it’s...

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What is the Right Entity for You?

As an owner or potential owner of investment real estate, you may have been warned not to take title to real estate in your own name. The reason is to protect your personal assets outside the entity from liability in the event of a lawsuit against...

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Is Your Corporate Veil Puncture-Proof?

If you own a corporation, you no doubt formed it because you wanted to protect your personal assets from any liability arising from your business activities. In other words, you wanted to take advantage of the infamous “corporate veil.” What is the...

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