Using OPM to grow in real estate

[Juan Ayala]

Hello, I am thinking about starting my first RE syndication. I plan on raising money from at least two dozen family and friends spread out all over the U.S. I was considering the 506(b) to do this. (Sky notice filing fee would be pricy) I only plan to raise maybe $150k to $250k the first go around to get the syndication process down. Is the 506(b) the best way of doing this or do you recommend another way? Over the years I've had several family and friends want to invest with me but I've been unsure what SEC friendly vehicle I could use. Tia! 

[Taylor L.]

Originally posted by @Juan Ayala:

Originally posted by @Taylor L.:

506(b) is quite common if you have a preexisting relationship with investors and do not need or want to publicly advertise. $150-250k is a pretty small raise for a syndication, though. Typically the fixed legal costs of syndication mean that only larger raises make sense financially. It would be good to study up on the free syndication materials out there just to start building your understanding before you move forward with doing a particular deal.

 Thank you! Yea, today I got a quote from a securities attorney, and they said the same thing that I would need to raise more for it to make sense. I will definitely continue to read up on this before pulling the trigger. 

 Definitely keep working on learning the ropes so you keep it all compliant. Keep building your network. You can keep planting those seeds before you have a deal. The reality is that when you start raising money, a huge percentage of the people who told you they were interested will not invest for one reason or another. That's just how it goes.