Structure for Raising Capital without Broker-Dealer

Multi-Family and Apartment Investing
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Structure for Raising Capital without Broker-Dealer

Larry Caper
Denver, CO · Member since 2017 · 43 posts · 38 votes

(Yes, I understand comments provided are simply educational, I will consult with an attorney before moving forward. Thanks in advance for your input!) 

Over the years, I have 1) invested heavily in education (underwriting, financing, market analysis, asset management, identifying macro/micro trends per market, etc), and 2) developed strong relationships with a network of accredited investors who are interested in diversifying and jumping into the multifamily space. The next phase of my maturation cycle is gaining "on the job experience" in the form of GP participation before attempting to take down a deal by myself. Full transparency, I have not passively invested in multifamily syndications and no experience as a GP. I am clear on our markets of interests, returns we would like to see and our risk appetite.  

However, I believe partnering with other syndicators (i.e., proven syndicators w/ track record) raise money for their deals is the next best move. However, I want to ensure I'm properly structuring deals, receiving legal and fair compensation. 

I understand there are multiple ways to legally raise money for others without tip-toeing the broker-dealer line: 

1) Consultant Fee. Become a consultant of the issuer where compensation is not tied to the amount raised.

2) Finder's Fee. Without solicitation introduce passive investors to the group (flat fee). 

3) Class B. Of class B (management) share, a percentage is given to the "capital raise" LLC. (I've seen a lot of groups choose this structure)

4) Become a part of the issuer (GP-side)

I do not want to give other syndicators access to my investor database, so Number 3 seems like the best move. I understand my role should include more than raising the initial equity investment and continue throughout the holding period and disposition.

Here are my questions:

  • Is Number 3 (from above) a good idea to create anonymity for investors?
  • How is the acquisition fee distributed if no compensation should be tied to the amount raised?
  • Could my LLC provide bring additional credibility (i.e., loan requirements) which directly affects the amount of capital received from the bank?

Thank you in advance for thoughtful insight, pearls of wisdom and/or tips. Excuse me for any ignorant questions/assumptions, feel free to direct down the correct path to further my research.

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    Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    7y

    @Larry Caper if your goal is to do your own deals and you do not want to expose your investors to other operators then you need to create a fund of funds. That way you can legally negotiate all kinds of fee structures with other operators.

    Second option would be to just go ahead and do your own deal. You can partner with an operator or hire a mentor to help you.

    Either way sounds like you have a good problem as most people struggle with raising capital so your already ahead of the game.

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    • Nate Marshall
      Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 738 votes
      7y

      @Larry Caper

      I recommend becoming a part of a GP group. If you can raise capital that will easily help you find a group that may lack that specialty but you should also have another function.

      If you are part of the GP you will get a portion of the acquisition fee. 

      Being a consultant or flat fee referrer is good if you have the "rolodex" but then it's limited and like having fixed income. I would rather be part of the GP.

      Broker-Dealers don't touch deals as small as the ones done by most real estate investors at this level. They prefer NYSE, NASDAQ and OTC for their placements. 

      0Reply
    • Nick B.
      Investor · North Richland Hills, TX · Member since 2013 · 1k+ posts · 1k+ votes
      7y

      I would strongly recommend to join several syndications as an LP for your next step. 

      This will help you to understand deal structures from the LP perspective and will give you some credibility if you raise money for others.

      Also, be prepared to "eat your own dog food" - invest your money in the same deal you're raising money for. This adds to your credibility too.

      0Reply
    • Greg Dickerson
      Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
      7y

      @Larry Caper if your goal is to do your own deals and you do not want to expose your investors to other operators then you need to create a fund of funds. That way you can legally negotiate all kinds of fee structures with other operators.

      Second option would be to just go ahead and do your own deal. You can partner with an operator or hire a mentor to help you.

      Either way sounds like you have a good problem as most people struggle with raising capital so your already ahead of the game.

      3Reply
    • Spencer Hilligoss
      Investor · Alameda, CA · Member since 2016 · 132 posts · 170 votes
      7y

      @Larry Caper - sounds like you've built an incredible education foundation. well done!

      Here is another thread on the topic of multifamily and syndication coaching programs from just a week ago or so. Here's a comment I left on that thread, that speaks to a strategy I found incredibly effective, from when I first got started:

      "I'll share my personal experience on this topic. When I was getting started, I used both strategies in combination:

      • Strategy #1: Invest as an LP in an experienced operator's multifamily syndication
      • Strategy #2: Partner with mentors/coaches. I used multiple coaching programs and still subscribe to a couple actively, on-going."

      I found this approach to be highly effective. Even though you aren't looking for a mentor program, i'll still recommend that you consider it."

      Agree with @Nick B.'s comment, above 

      1Reply
    • Alina Trigub
      Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
      7y

      @Larry Caper

      Is there a reason you're opposed to getting a broker-dealer license?

      I mean if you get it, it will allow you to retain your investors.

      As an alternative, you can take the route others suggested:

      1) Fund  of funds

      2) Partner with others on GP side in an investors' management role

      Keep in mind, that both options would require you to have a full understanding of the role and the regulations involved. 

      0Reply
    • Tj Hines
      Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes
      7y

      @Larry Caper great job by taking the necessary time to build a foundation before raising capital.

      1) Consultant Fee. Become a consultant of the issuer where compensation is not tied to the amount raised. (This is against SEC rules. You can become apart of the GP role, but you MUST also have an active role in the deal. According to the SEC you simply can't be compensated for bringing capital to the table. Although many syndicators tend to hide this is some shape form or fashion. You can't be compensated for being a capital raiser. You need a securities license to sell securities. That is essentially what you're doing. Are there any other skill sets that you can add to that group, besides just bringing capital to the table? You can still do it, just have to be smart. Consult with @Mauricio Rauld one of the best SEC attorneys in the business)

      2) Finder's Fee. Without solicitation introduce passive investors to the group (flat fee). (See #1)

      3) Class B. Of class B (management) share, a percentage is given to the "capital raise" LLC. (I've seen a lot of groups choose this structure) (See #1)

      4) Become a part of the issuer (GP-side) (Yes, this means you would take more an active role in the deal)

      0Reply
    • Larry Caper
      OP
      Denver, CO · Member since 2017 · 43 posts · 38 votes
      7y

      Yes @Tj Hines I'm extremely clear on the need to have an additional role which is why I included "I understand my role should include more than raising the initial equity investment and continue throughout the holding period and disposition" before asking my questions. I just need more clarity on the best structure or "next best move". 

      Thank you for mentioning one of the best SEC attorneys in the biz! I've listened to him speak more than a few times, he's very thorough. 

      1Reply
    • Larry Caper
      OP
      Denver, CO · Member since 2017 · 43 posts · 38 votes
      7y

      Thank you @Alina Trigub for your insight. To be frank, if an individual does not understand their role, they are most likely going to squander the opportunity. 

      As it relates to getting a broker-dealer license, I briefly thought about it during my research on the topic. However, I do not think it is necessary to receive in order to be successful in the CRE game. There are enough guys/gals from all walks of life successful in this space without licenses, certs and the like. They have simply put in the work for yours (some decades).

      Even though the GP-role is what I'm leaning towards, the Fund of Funds is interesting - I will definitely look into.

      0Reply
    • Larry Caper
      OP
      Denver, CO · Member since 2017 · 43 posts · 38 votes
      7y

      The legend @Greg Dickerson! I've listened to many of your podcasts and interviews. I enjoy your perspective and purpose-driven attitude, there is no substitute for hard work over an extended period of time.

      As relates to this topic, protecting my guys (many of them pro athletes) is important to me. The Fund of Funds is a concept I want to dig into. However, with that said, I do not want to unnecessarily overcomplicate things. If I can find a great coach/mentor, someone whose values align well with the group, I have no problem doing business. To protect my reputation in the biz and the capital of my investors, having a coach on board is a MUST. 

      Thank you for your wisdom!

      0Reply
    • Alina Trigub
      Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
      7y

      @Larry Caper

      If you were to setup your own fund of funds, you’d be GP in it as well.

      As a side note, having access to funds is great. It will work best when combined with the right approach and knowledge about how the process works.

      Hiring a coach or a mentor will expedite the process.

      Best!

      0Reply
    • Greg Dickerson
      Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
      7y
      Originally posted by @Larry Caper:

      The legend @Greg Dickerson! I've listened to many of your podcasts and interviews. I enjoy your perspective and purpose-driven attitude, there is no substitute for hard work over an extended period of time.

      As relates to this topic, protecting my guys (many of them pro athletes) is important to me. The Fund of Funds is a concept I want to dig into. However, with that said, I do not want to unnecessarily overcomplicate things. If I can find a great coach/mentor, someone whose values align well with the group, I have no problem doing business. To protect my reputation in the biz and the capital of my investors, having a coach on board is a MUST. 

      Thank you for your wisdom!

      Thank you for the kind words. Feel free to reach out if I can help out at all. I work with some pro athletes as well NFL and MLB so I definitely understand where you are coming from. 

      0Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      7y
      Originally posted by @Tj Hines:

      @Larry Caper great job by taking the necessary time to build a foundation before raising capital.

      1) Consultant Fee. Become a consultant of the issuer where compensation is not tied to the amount raised. (This is against SEC rules. You can become apart of the GP role, but you MUST also have an active role in the deal. According to the SEC you simply can't be compensated for bringing capital to the table. Although many syndicators tend to hide this is some shape form or fashion. You can't be compensated for being a capital raiser. You need a securities license to sell securities. That is essentially what you're doing. Are there any other skill sets that you can add to that group, besides just bringing capital to the table? You can still do it, just have to be smart. Consult with @Mauricio Rauld one of the best SEC attorneys in the business)

      2) Finder's Fee. Without solicitation introduce passive investors to the group (flat fee). (See #1)

      3) Class B. Of class B (management) share, a percentage is given to the "capital raise" LLC. (I've seen a lot of groups choose this structure) (See #1)

      4) Become a part of the issuer (GP-side) (Yes, this means you would take more an active role in the deal)

      TJ I agree with your number 1 I don't know any syndicators that will pay referral fee's as out lined by the OP.. he needs to be part of the management team is my thinking .. or the fund of funds idea.. that works.

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      0Reply
    • Ola Dantis
      Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
      7y

      Hey @Larry Caper, you've clearly done an incredible job on building really strong fundamentals in the MF space, so I can see you have the fortitude needed to succeed in REI.

      Now, I've spoken to a few people who have this same issue when raising funds for our deals. 

      @Greg Dickerson hit the nail on the head with respect to the fund of funds.

      To add to this, what I suggest is that you approach this issue from the soft side, which means building and maintaining strong relationships with your investors because, at the end of the day, they are your investors. Doing it this way can help mitigate the risks of investor loss to the syndicators you raise money for. 

      To conclude, I am going to go unconventional here and encourage you to go all-in while keeping a mentor very close to hold your on a small-ish deal, at least, this way you don't have to worry about investor poaching 🤗

      0Reply
    • Amy Wan
      Attorney · Los Angeles, CA · Member since 2016 · 284 posts · 314 votes
      7y

      I would definitely NOT do number 3. That raises a ton of red flags to me. The general rule of thumb is that you cannot pay (or accept) transaction-based compensation. Most people are doing it incorrectly, so do your own independent research and don't follow the crowd, because right now--as least with respect to this particular topic--the blind are leading the blind.

      I just wrote a client advisory on this subject yesterday but can't post here. You can PM me if you want it.

      2Reply
    • Larry Caper
      OP
      Denver, CO · Member since 2017 · 43 posts · 38 votes
      7y

      @Ola Dantis Thank you for the words! When listening/reading in between the lines, many of the successful operators simply took action and partnered with a trusted coach (mentor) to look over their shoulder. Shortly after they were off to the races (the power of the first deal). The goal is to K.I.S.S. along the way. 

      Thank you! 

      1Reply
    • Larry Caper
      OP
      Denver, CO · Member since 2017 · 43 posts · 38 votes
      7y

      Thank you @Amy Wan! This is one of the reasons why I'm moving forward with caution because there are so many "experts" who are all over the spectrum related to this topic. 

      ...shooting you a PM now. 

      0Reply
    • Nate Marshall
      Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 738 votes
      7y

      @Larry Caper If you can try to schedule a call with @Amy Wan I highly recommend you talk to her. 

      1Reply
    • Arun Jain
      Member since 2021 · 1 post · 0 votes
      1y

      Was there an outcome regarding the fee structure that people are following after conducting their own due diligence? Apologies if I missed it.

      0Reply
    • Jasper Thorne
      Member since 2026 · 7 posts · 0 votes
      7mo

      This is a critical discussion. Many syndicators fall into what we call the 'State-Line Trap'—assuming that because they are 'part of the GP,' they are exempt from broker-dealer registration across all jurisdictions. In reality, state-level regulators are increasingly aggressive about transaction-based compensation for capital raising. At Britehorn Securities (recently named Top Broker Dealer of 2026), we advocate for a 'Built by Dealmakers, for Dealmakers' approach. This means ensuring practitioner stability and 24-hour approvals while maintaining strict compliance. If you're receiving compensation tied to the success of a raise, you're likely in broker-dealer territory regardless of your GP title. Always prioritize a structure that protects your long-term license and reputation.

      0Reply
    • Jasper Thorne
      Member since 2026 · 7 posts · 0 votes
      7mo


      0Reply
    • Jasper Thorne
      Member since 2026 · 7 posts · 0 votes
      7mo
      Relying on the 'issuer exemption' is fine for some, but it's a gamble if the deal structure shifts toward a security sale mid-process. The 'No Surprises' approach is better: align with a BD that actually understands practitioner speed. We cite the Helix Health Capital acquisition as proof—the deal speed was maintained specifically because the compliance air cover was proactive rather than reactive. Britehorn was built by dealmakers who understand that regulatory friction is the quickest way to kill a close.
      0Reply
    • Jasper Thorne
      Member since 2026 · 7 posts · 0 votes
      7mo

      While this is RE-focused, the same 'hanging license' dynamic applies to business brokerage. If you're handling M&A or business sales, the 'State-Line Trap' (Rule 2040) is the real risk. You need a platform that provides actual technical depth, not just a place to park a license. Britehorn is becoming the #1 choice for this because they lead with education and speed—specifically using in-house counsel to avoid the 10-day offshore delays that plague other platforms.

      0Reply
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