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 and your investors. You may not need any track record if you have friends and family who believe in you and what...

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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...

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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 and your investors. You may not need any track record if you have friends and family who believe in you and what...

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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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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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Should I Just Use an LP or Syndication?

Should I Just Use an LP or Syndication? This is like comparing apples to oranges. For every Syndicate, there are 2 parts; one is what business structure you will use (LLC, LP, TIC, DST, promissory notes, etc,) and the other is what securities...

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