Accredited Investors for Syndicated Properties
How to find “accredited investors” for syndicated properties?
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@Kevin Ross
Are you trying to find them or get them to invest. That is two very very different tasks.
Finding accredited investors is easy - you can buy a list. Getting them to invest, especially today when raising money is hard (don’t care what others say it’s not easy).
You need a marketing plan that includes hating the deal, why they should invest, the risk and your experience.
If you have not raised money before raising today is like swimming against the currents
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Quote from @Kevin Ross:
How to find “accredited investors” for syndicated properties?
Accredited investors want to invest in deals in which the sponsor complies with SEC Reg D 506 b or c. The cost of hiring a securities specialist attorney and filing the Reg D with the SEC as well as various state securities agencies starts at $10,000 and goes up from there. If you depend on the “general exemption for private offerings” and just have attorney draw up an operating agreement, almost no accredited investors would want to invest. Further, you’d be exposed to SEC declaring your offering not “exempt” at some future time, and would give up any statutory defenses should you be sued by disgruntled investors.
Even if you comply with Reg D, accredited investors have so many choices these days that the following is necessary for a successful offering in addition to Reg D compliance
1- A sound investment proposal
2 - A split between sponsor and investors providing investors with the vast majority of the profit.
3 - Cash investment by sponsor
4 - Attractive and realistic anticipated or projected return on investment
5 - Risk level commensurate with return
6 - Sponsor verifiable track record of success
People inexperienced in real estate investing all think that they will create a syndication for almost nothing, and despite having no personal cash to invest and no experience to bring to the table, they will sell the deal to investors and keep 50% of the deal for their efforts. Nothing could be further from reality.
Easiest way is to start with family and friends, people in your internal network. Build a track record with those investors then that will open up referrals and a better avenue for sourcing investors online.
Quote from @Chris Seveney:
@Kevin Ross
Are you trying to find them or get them to invest. That is two very very different tasks.
Finding accredited investors is easy - you can buy a list. Getting them to invest, especially today when raising money is hard (don’t care what others say it’s not easy).
You need a marketing plan that includes hating the deal, why they should invest, the risk and your experience.
If you have not raised money before raising today is like swimming against the currents
I hear you and understand. We have put a lot of our own money into the projects already.. And now have created an "offering" for investors to view. Now we would like to open the doors and continuing networking with interested parties. I really appreciate your feedback.
Quote from @Brock Mogensen:
Easiest way is to start with family and friends, people in your internal network. Build a track record with those investors then that will open up referrals and a better avenue for sourcing investors online.
Hi Brock, I messaged you back.. We recently opened an offering up for the property.
Quote from @Don Konipol:
Quote from @Kevin Ross:
How to find “accredited investors” for syndicated properties?
Accredited investors want to invest in deals in which the sponsor complies with SEC Reg D 506 b or c. The cost of hiring a securities specialist attorney and filing the Reg D with the SEC as well as various state securities agencies starts at $10,000 and goes up from there. If you depend on the “general exemption for private offerings” and just have attorney draw up an operating agreement, almost no accredited investors would want to invest. Further, you’d be exposed to SEC declaring your offering not “exempt” at some future time, and would give up any statutory defenses should you be sued by disgruntled investors.
Even if you comply with Reg D, accredited investors have so many choices these days that the following is necessary for a successful offering in addition to Reg D compliance
1- A sound investment proposal
2 - A split between sponsor and investors providing investors with the vast majority of the profit.
3 - Cash investment by sponsor
4 - Attractive and realistic anticipated or projected return on investment
5 - Risk level commensurate with return
6 - Sponsor verifiable track record of success
People inexperienced in real estate investing all think that they will create a syndication for almost nothing, and despite having no personal cash to invest and no experience to bring to the table, they will sell the deal to investors and keep 50% of the deal for their efforts. Nothing could be further from reality.
Hi Don, we have recently opened up an offering for potential investors to view. I am new to this platform, so I am trying to build my network with interested parties. I appreciate your response.. It helps more than you know.
Quote from @Don Konipol:
Quote from @Kevin Ross:
How to find “accredited investors” for syndicated properties?
Accredited investors want to invest in deals in which the sponsor complies with SEC Reg D 506 b or c. The cost of hiring a securities specialist attorney and filing the Reg D with the SEC as well as various state securities agencies starts at $10,000 and goes up from there. If you depend on the “general exemption for private offerings” and just have attorney draw up an operating agreement, almost no accredited investors would want to invest. Further, you’d be exposed to SEC declaring your offering not “exempt” at some future time, and would give up any statutory defenses should you be sued by disgruntled investors.
Even if you comply with Reg D, accredited investors have so many choices these days that the following is necessary for a successful offering in addition to Reg D compliance
1- A sound investment proposal
2 - A split between sponsor and investors providing investors with the vast majority of the profit.
3 - Cash investment by sponsor
4 - Attractive and realistic anticipated or projected return on investment
5 - Risk level commensurate with return
6 - Sponsor verifiable track record of success
People inexperienced in real estate investing all think that they will create a syndication for almost nothing, and despite having no personal cash to invest and no experience to bring to the table, they will sell the deal to investors and keep 50% of the deal for their efforts. Nothing could be further from reality.
How would you go about it as a first time syndicator?
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Everyone has to start somewhere; but, the answer depends on the individuals background, experience and track record.
If the person wanting to sponsor a syndication has a verifiable track record of success in similar investments done personally, he may be able to start with a capital raise from friends and acquaintances and people he meets networking. After one or two successful syndications, he could create a platform and raise money on line utilizing a Reg D offering.
A person with no or limited experience investing in similar deals has no business (imo) risking other people’s money. Syndicating deals is not a method of someone without experience or capital to buy property or leverage their way into deals. It’s a method of shared ownership allowing someone with the experience, knowledge and track record to offer superior risk related returns to passive investors and receive adequate compensation based partially or in whole on the success of the deal.
Someone who’s never raced a car before starts by taking lessons then maybe enters a local
midget” car competition; they don’t start as an entrant in the Indianapolis 500.
Quote from @Don Konipol:
Everyone has to start somewhere; but, the answer depends on the individuals background, experience and track record.
If the person wanting to sponsor a syndication has a verifiable track record of success in similar investments done personally, he may be able to start with a capital raise from friends and acquaintances and people he meets networking. After one or two successful syndications, he could create a platform and raise money on line utilizing a Reg D offering.A person with no or limited experience investing in similar deals has no business (imo) risking other people’s money. Syndicating deals is not a method of someone without experience or capital to buy property or leverage their way into deals. It’s a method of shared ownership allowing someone with the experience, knowledge and track record to offer superior risk related returns to passive investors and receive adequate compensation based partially or in whole on the success of the deal.
Someone who’s never raced a car before starts by taking lessons then maybe enters a local
midget” car competition; they don’t start as an entrant in the Indianapolis 500.
Thank you for your response.