Architect · Raleigh-Durham, NC · Member since 2016 · 76 posts · 47 votes
8y
@Account Closed Your down will be 25% for a commercial investment property. I am not a lawyer...repeat I am not a lawyer, but depending on the circumstances and your relationship to your partner(s) you may be able to simply collect funds without forming a syndication. If you were to shop around and solicit funding from every Tom, Dick and Harry...well yeah you're syndicating. You can probably get away with spending $10k on drawing up legal docs if you put in legwork, this simply needs to be adjusted in your proforma, along with exit strategy(ies) and so on.
Rental Property Investor · Charlottesville, VA · Member since 2012 · 1k+ posts · 726 votes
8y
@Account Closed what you're describing is definitely a syndication. To form one you're probably looking at $10-20k in legal fees so no, it wouldn't be practical for a $100k property.
Architect · Raleigh-Durham, NC · Member since 2016 · 76 posts · 47 votes
8y
@Account Closed Your down will be 25% for a commercial investment property. I am not a lawyer...repeat I am not a lawyer, but depending on the circumstances and your relationship to your partner(s) you may be able to simply collect funds without forming a syndication. If you were to shop around and solicit funding from every Tom, Dick and Harry...well yeah you're syndicating. You can probably get away with spending $10k on drawing up legal docs if you put in legwork, this simply needs to be adjusted in your proforma, along with exit strategy(ies) and so on.
Attorney / Broker · Member since 2018 · 29 posts · 30 votes
8y
@Jeff Jerma consider doing research on possible exemptions before you make any moves due to a potential prohibition on solicitation. Depending on the investor's net worth, they may be required to meet the requirements of a sophisticated investor as defined by law in order to participate in your offering.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
8y
It is legal to raise funds - you don't need to have a license or be a "syndicated investor." That said, you should educate yourself on the rules and have an attorney you are using.
If you are going to partner with 20 people (or 1 for that matter) and they are not the main decision makers and doing the "day to day," then you are likely offering a securities and need to do a full offering. With that type of raise, I would recommend raising at least $500k in funds to justify the cost.
Also, with you example, it would be very hard to get financing unless several - if not all - of the investors sign on the loan and give a personal guarantee.
Rental Property Investor · 84058 · Member since 2018 · 14 posts · 9 votes
8y
It was touched on briefly, but you will definitely want to look into securities laws, and, especially with a deal as small as the one you used as an example, exceptions. I am not a lawyer, you will DEFINITELY need to check with one, but to give you general ideas, if your "investors" are actually "partners" and have voting rights and you have regular meetings, bringing together 5 strangers on the deal is reasonable as owners of the LLC holding the property. Up to about 10ish if you have a prior relationship. These are just round numbers, don't take it for gospel, I just want to give you talking points for your lawyer. Anything above that, you are looking at too grey a line, definitely play it safe with the SEC. Again, see a lawyer who is an expert in this before you hurt yourself.
thanks ryan. i will speak with a lawyer . So out of curiosity, if i was close friends with some people who wanted to help invest. would they need to be a partner? or could i offer them a return and tell them ill only borrow their money for 6 months