Frequently Asked Questions

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How Do I Split Money With Investors?

How Do I Split Money With Investors? There is no “right” answer on how to split money with investors. The answer depends on the deal. In your early deals, your friends and family who believe in you and what you're doing are your most likely...

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How to Abandon an Offering

Here are the things you should do to abandon an offering that has no assets and no members: Hold a meeting of members of the Asset Management Entity (if applicable);  Take meeting minutes and a vote to abandon the offering; create a resolution to...

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How to Review a Balance Sheet and Income Statement

When considering any investment opportunity, you should perform due diligence not only on the deal being offered but the entity sponsoring the deal. An important aspect of that is to examine the entity’s financial records. Two of the main ones are:...

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What Happens if I Don’t Dissolve My LLCs?

If you want to raise capital and be a syndicator, you have a fiduciary obligation to your investors to properly form, operate and dissolve the companies you create in connection with your offerings.  The proper way to terminate a company is to file...

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How Do I Determine Investor Splits? 

Start by answering this question: What is the overall average annualized cash-on-cash return (AAR) for the project?  If you don’t know how to calculate this, please follow the steps below. If you don’t want to do this yourself, there are plenty of...

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What is a Minimum/Maximum Raise?

The minimum is the absolute minimum amount a syndicator can raise from investors and still be able to close, meaning you are not collecting an acquisition fee or getting reimbursed for pre-closing expenses, and may not have all the capital...

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Reaffirming an Investor’s Accreditation

Question: Can an investor that invested with us before in a Rule 506 Offering complete a re-affirmation letter in lieu of getting re-verified as an accredited investor if they want to invest in our current Rule 506(c) Offering? Answer: Investors...

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How do I Invest in a Rule 506(c) Offering?

Want to invest in a Rule 506(c) offering? Here is what you must do:  In order to claim the Rule 506(c) exemption, the issuer of the securities you want to purchase must be able to demonstrate they took “reasonable steps” to ensure that all...

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What Entity Should I Use to Make Offers on Real Estate?

You should create a “Brand LLC” that you will use to make offers. It will either be used as the Manager LLC of a syndicate or it may be used as your representative member in the management of a syndicate if there are other management team members...

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Can My Real Estate Fund Hire Employees?

Typically, a Fund operating agreement does not contemplate or authorize the direct hiring of employees. It can be a mistake for an entity that has investors to hire employees, as you start mixing up liabilities (investor liabilities and employee...

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How Long Do I Need to Syndicate a Property?

Timing of a deal is a balancing act. You can’t wait until you have completed all of your due diligence before you engage your securities attorney — or you won’t have enough time to raise the money. Once you engage us, we will schedule a...

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Beware of Single-Check Writers

Single-check writers are people who say they can fund your whole deal. They are usually private equity companies, hedge funds, family offices or high net worth individuals.  Single-check writers have a habit of:  1. Going dark right...

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How to Choose a Name for Your Branded Company

Before you get too invested in your favorite name for your new company, here’s what you need to do:  Do a Google search to see who else is using it or something very close to it; If that’s clear, do a domain search at GoDaddy to see if...

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What is a ‘Sophisticated Investor’?

To be “sophisticated,” the Investor must have, under Rule 506(b)(2)(ii), “either alone or with his purchaser representative(s) such knowledge and experience in financial and business matters that he is capable of evaluating the merits and...

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Can I Show Past Deals To Prospective Investors?

This is a common question we hear in the real estate securities law industry so we wanted to answer it here. Until you have established a substantive relationship, you cannot show past deals if you are doing Rule 506(b) Offerings, as the SEC...

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What’s a Good CRM for Raising Capital?

What's a Good CRM for Raising Capital? We started out with Insightly (a Google app); we now use Active Campaign. Insightly is a good starter, as it used to be free for two people. We upgraded to Active Campaign when we wanted to start a newsletter...

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What’s a Convertible Promissory Note Offering?

What’s a Convertible Promissory Note Offering? A Convertible Promissory Note Offering allows you to raise money in advance of having a deal under contract or within a short timeframe. With a Convertible Promissory Note Offering, you can offer note...

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Do You Provide Securities Offering Document Templates?

Do You Provide Securities Offering Document Templates? We don’t offer document templates. We provide reasonable, lump-sum fees for drafting our clients’ securities offering documents and helping them properly structure their companies, and we have...

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Do I Need a PPM?

Do I Need a PPM? Recently, we were asked: "I know someone who does deals with the same group of investors over and over and just uses a limited partnership agreement without a subscription agreement, PPM, or securities notice filings. Can I do...

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Can a Canadian Citizen Invest in My Syndicate?

Can a Canadian Citizen Invest in My Syndicate? Yes, but if your investment entity is a limited liability company, they could be double-taxed in the United States and Canada unless they have their own C Corp or Limited Partnership that makes the...

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When Can I Talk Deal Points With Investors?

It depends whether you are doing a Rule 506(b) Offering, and if so, you must establish a pre-existing, substantive relationship before discussing specific deal points (which constitutes making an offer) with them. I suggest you read the article in...

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Can I Offer Different Terms to Different Investors?

Can I Offer Different Terms to Different Investors? The two primary reasons to do this are to reward specific investors for investing more than others or investing early.There are two ways you can do this:SUBCLASSES - You can create one or more...

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Is This Ad Legal?

Is This Ad Legal? An advertisement containing the following language was forwarded to me, with the question, “Is this ad legal?”12+% AVERAGE CASHFLOW!!82+% 5-YEARINVESTOR RETURN!!The ad went on to show photos of a multifamily property, discussing...

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Should I Become an ‘Accredited’ Investor?

Should I Become an ‘Accredited’ Investor? Newbie investors who encounter opportunities that are open only to Accredited Investors sometimes wonder, “Should I become an Accredited Investor?”The fact of the matter is that “Accredited” is not...

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Are Rule 506 Offerings Exempt from Blue Sky Laws?

Are Rule 506 Offerings Exempt from Blue Sky Laws? Rule 506 offerings are exempt from further regulation at the state level, except that issuers must:Be able to demonstrate to state regulators how they followed the applicable 506 rules,Not pay any...

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How Does Cash Flow in a Syndicate?

How Does Cash Flow in a Syndicate? Here is how cash flows in a Syndicate (as drafted by Syndication Attorneys):On acquisition Investor funds are collected in the Investor LLC Operating Account.When it is time to close on the Property, the Manager...

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How Do I Split Money With Investors?

How Do I Split Money With Investors? There is no “right” answer on how to split money with investors. The answer depends on the deal. In your early deals, your friends and family who believe in you and what you're doing are your most likely...

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How to Write a Winning Biography

How Can I Write a Personal Biography for my Investment Company that Inspires Confidence in my Investors? This isn’t a resume, so do this in paragraph format (not bullets). It doesn’t have to be long, just two to three paragraphs at most.Here are...

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How Do I Structure a Small Deal With Investors?

How Do I Structure a Small Deal With Investors? From a securities legal standpoint, you could do a joint venture (JV) or member-managed LLC, where the investors are actively involved and stay in control of their own money, if you don’t want to have...

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How Can You Set Yourself Up for Success In Syndication?

How Can You Set Yourself Up for Success In Syndication? The best way to set yourself up for success in syndication is to have a ready source of potential investors so that when you have a deal, you have investors to call.You do this by developing a...

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5 Steps To Choosing Your Branded Company Name

5 Steps To Choosing Your Branded Company Name Do a Google search to see if anyone is already using the name or something similar.Check GoDaddy or another domain provider to see if the domain is available.If both of those fly, then check the...

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What is a Consent Resolution?

What is a Consent Resolution? A consent resolution is a specific document giving you authorization from the members/managers of each of your companies to proceed with the purchase and the loan and designating one or more of the members of the...

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What’s a Subscription Agreement?

What’s a Subscription Agreement? A Subscription Agreement is a legal document in a securities offering package that contains an investor’s representation and warrantees that they meet the financial qualifications to invest, understand the risks,...

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Should I Only Include Accredited Investors in My Deals?

Should I Only Include Accredited Investors in My Deals? Some people say “yes,” but honestly, my clients usually don’t start looking for new accredited investors until they have tapped out their group of family and friends who aren’t accredited. You...

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Where Can I Find Big Investors for my Deals?

Where Can I Find Big Investors for my Deals? Looking for large investors can be a dead end for many syndicators until they have significant syndication experience. A lot of new syndicators spend tons of time seeking “whale” investors only to learn...

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