pre funding and sec compliance question

8 Replies

If I have built a large database of clients for my business and don't have any syndications, paperwork indicating I'm in syndications, actual deals in front of me, or a past syndication,  can I point blank email my database and directly ask for people interested in being a passive investor and not break any sec rules?  I'm working on growing my list of possible investors while I'm getting started.  Or if you have a link or somehting on where to go get that info, it would be appreciated.

@Clayton Collins

As long as you don’t mention any specifics of a deal, you’re fine in general. 

In general, I’d highly recommend reading a book on syndications and speaking with a securities attorney. 

Start with the book written by Joe Fearless and @Theo Hicks  

Listen to syndication show podcast by @Whitney Sewell

Have more questions feel free to PM me.

You can approach potential investors before you have a deal and ask if they'd be interested in investing when the time comes. It's just a matter of getting an indication of interest. 

You'll get the best results if you tailor your approach to the individuals rather than send out a mass email blast. These should be people you actually know, and not an email list you bought somewhere.

Approaching investors for soft commitments before you have something for them to invest in is the best way to prepare for when you do have something for them to invest in. You'll get the best results if you're prepared with materials and you have a track record of success in real estate and/or some area of business.

But - I'm not a lawyer.

If building a syndication business is what you want, it might make sense to engage a syndication attorney to find out exactly what you can and can't do with your list. It's going to vary in my experience. 

@Alina Trigub   I started with reading and podcasts and they mentioned prefunding.  So far I've got 56 people interested so maybe 5-10 will. I appreciate the info and I'll listen to the other podcast, I haven't heard of that one.

@Taylor L.   I've only asked on the phone or in person so far.  I have a lot of same industry professionals I thought about emailing.  I guess doing the same thing I've been doind is better now that I think about how many questions all the other people had.

@Lucas Miller   I'm working to join a group currently and they told me that I need to fundraise half the capital required so I know they have an attorney.  I'll ask them.

@Greg Scully   That's a great idea that I hadn't thought of.  I'll start there.  thanks

Clayton,
This is a good start. I can give you more podcasts and books recommendations if interested.
Also, keep in mind it’s a lot easier to get verbal (soft) commitments versus the actual (hard) ones!
Best!


Originally posted by @Clayton Collins :

@Alina Trigub  I started with reading and podcasts and they mentioned prefunding.  So far I've got 56 people interested so maybe 5-10 will. I appreciate the info and I'll listen to the other podcast, I haven't heard of that one.

@Taylor L.   I've only asked on the phone or in person so far.  I have a lot of same industry professionals I thought about emailing.  I guess doing the same thing I've been doind is better now that I think about how many questions all the other people had.

@Lucas Miller   I'm working to join a group currently and they told me that I need to fundraise half the capital required so I know they have an attorney.  I'll ask them.

@Greg Scully   That's a great idea that I hadn't thought of.  I'll start there.  thanks

Yes you can. We do this all the time to gain interest. You can not talk about specific deals, nor can you "prime the market". Meaning you cant say "we typically give (x) returns". You can talk about the benefits of investing passively in real estate and direct people to whatever action you want for them to raise their hand. Keep it vague and informational. Nothing specific especially on the returns.