Partnering as Investors on Syndications - Is It Possible?

5 Replies

Hello All, 
Both I and my current investing partner for buy-n-holds have been interested in investing in Syndication some time in the near future. They are Accredited and I am not, but qualify as 'Sophisticated'. Due to recent rule changes limiting how much sophisticated investors can put into a syndication it sounds like most Syndicators are no longer going to allow their participation. 

I am wondering if there is a legal way for me to invest in conjunction with my partner by either giving them, loaning them or some other form other than an actual partnership where the investing would be done in their name only?

Not trying to break any rules, just see what the options are :-) An example would be that years ago we 'flipped a lot' where we each put in half the money but it was all done in their name. We split things 50-50 after capital gains taxes - so something like that.

Thanks, Dan Dietz

Could you clarify about recent rule changes regarding sophisticated investors? I haven't heard of anything new that further restricts sophisticated/non-accredited investors beyond the limits that have already been in place, but it's possible I missed a recent policy proposal.

@Taylor L. when I recently talked to a well know syndicator who is often active here on BP this is what they shared with me........

"SEC placed limits on how much sophisticated investors can invest in the recent upgrade to the law. I believe if you make under $100,000 you can invest no more than 5% of either your income or net worth, and if you make over $100,000 that goes up to 10%. He neither case this does not need our minimums. This is a new thing as of about 2 months ago."

I can't find the recent changes right now, but I did the other day. The SEC makes it sound like they are 'protecting us' sophisticated investors ..... I say they are screwing up my plans :-(.

Dan Dietz

I believe Holdfolio is still taking non accredited investors. I don't work for them but was just looking into sydnications and invested with one but they only take accredited investors which I fall under.

Originally posted by @Daniel Dietz :

@Taylor L. when I recently talked to a well know syndicator who is often active here on BP this is what they shared with me........

"SEC placed limits on how much sophisticated investors can invest in the recent upgrade to the law. I believe if you make under $100,000 you can invest no more than 5% of either your income or net worth, and if you make over $100,000 that goes up to 10%. He neither case this does not need our minimums. This is a new thing as of about 2 months ago."

I can't find the recent changes right now, but I did the other day. The SEC makes it sound like they are 'protecting us' sophisticated investors ..... I say they are screwing up my plans :-(.

Dan Dietz

I am not an attorney but I believe that limit only applies to Regulation Crowdfunding. Whereas most syndicators in area who would offer to non accredited, sophisticated investors operate under Reg D.

@Daniel Dietz We no not limit the investment amount for Reg D qualified investors. This is 506 b or 506c typically. I know of no such limit nor been advised by my attorney of such and just completed another PPM for an investment opportunity. If anything they are making REG D more accessible, ie. new changes allow more people to qualify as accredited for example, holding a Series 7 license.

There can be some restrictions depending on the PPM on total investment amount or total amount of investors depending on states involved, however this is typically deal or investment specific and usually at substantial amounts. I do know the 504 Reg D use to have a limit of 5 million raised in a year, but even that is now at $10 million cap.

Although, would love to hear more on the restriction if find it.