All Forum Posts by: Bryan Hancock

Broker-dealers are allowed to charge "transaction-based income."  So if you get the Series 7 and are supervised by a BD you could place capital for a commission effective immediately.  This is probably the safest route to what you're hoping to do.

If you can take income in some other fashion given how your affairs are organized there is a whole host of other ways to get paid for the value you're offering.  You could fall in to the Series 65 regime as a RIA, co-GP as a deal sponsor and provide other deal activities other than raising capital, or form things up in other ways.  A lot depends on what you're actually doing.  If you're solely raising capital for a fee you really fit most squarely in the B/D category.

Note that the securities laws have also recently evolved to make "finders" a lot more legitimate.  If you're finding investors and are getting paid for the introduction and not to sell the security you'll need to play the role of matchmaker and let the sponsor sell using the issuer exemption.  This may or may not work for what you're doing.  Just make sure both sides of the deal and your attorney are all clear about the role you're playing and what you can and cannot do without the proper licensure.  

If you impute the value of your time in any active investment the "returns" on your money look far less impressive.  Can the deal afford what you're being paid doing whatever you're doing now?  Keep in mind the value of your time will vary too based on your skills and expertise so in theory your time should be more valuable in the future, but this would need to be discounted to today using your favorite metric.

The summary statement is there ain't no such thing as a free lunch.  

Risk and reward/return are inextricably linked.  There is no such thing as a free lunch.

Those sponsors who offer higher returns will be more junior or have riskier deals.  It's just how capital formation works.  The trick is finding a nice balance of higher returns with somewhat-seasoned sponsors on deals you assess are good ones.  

There is no "industry standard."  All that matters is what the partners can negotiate.  I try to pay our investors north of 20% ROE annualized over the horizon of the investment, which requires making assumptions about what things will sell for and how much they'll cost to build.  Other factors like the duration of the project play in heavily in this analysis and development is notoriously difficult to predict the timing of and to account for life's uncertainties.  

Having said that a split between 40/60 and 60/40 normally is what things settle out at for the projects we're working on.  Other markets may have vastly different margins and splits to go with them.  

I think a big portion of this discussion has to do with the perceived risk profile of the investment you're making.  If there is a big opportunity for downside you should probably invest the money.  Risk is:

-Likelihood of occurrence

-Severity of the downside if occurrence happens

If either of these are high the investment of $20k is well worth the benefit you receive IMO. 

Think of the memorandum (or offering circular if non-private) as an insurance policy outlining the risks in the project and weigh the costs of paying for it against the benefit of having it if someone wants their money back or wants to sue you if the deal goes sideways or south.  This is a risk discussion and the attorneys will ALWAYS tell you to pay the money.  As the business owner you need to make the business decision about cost/benefit.  

Yes....there are "syndicators" who are spreadsheet wizards and dupe newbies into putting a lot of capital at risk based on reversion cash flows and hopes that the market always rises.  Everyone can get rich in Excel.

There are also LPs who claim to "own" 2000 doors because they purchase 1 unit in 6 syndications.  Many of them also wear very big belt buckles and ten gallon hats.  I for one think I "own" all of the fortune 500 companies because I've invested passively through my index fund and have a tiny claim on future earnings; indirectly of course.  

Everyone is really just looking to get the best deal and money and expertise are both needed to make deals work.  Ignore the Facebook culture attention-seeking and just learn to invest wisely.  There are a ton of great resources both on this site and others to help you learn.

I can't speak to the legalities either, but functionally if an accreditation service says you have to meet X to gain their accreditation that is likely what you're going to have to do for any sponsors who would use their service.  The sponsors are hiring the accreditation service to go through this process with investor candidates and thus you'll be using whatever their risk tolerance level is to gain the accreditation status you need.  

Jor Law is the founder of VerifyInvestor and is also a securities attorney.  I'd look around for commentary from him or consider emailing him.  He's a nice guy and is generally very responsive.  He's also very non-lawyer in the sense that he thinks like an entrepreneur, which is quite rare in my experience.  

I am kicking around the idea of starting a new fund with my securities attorney. The thought would be that we could leverage the coin as collateral for a credit facility to buy commercial real estate. Then the sellers would get cash and the people with the coins could get exposure to CRE. This could, in theory, also open BTC up to a bigger class of investors who are not seeking to go on the roller coaster or are afraid of it for whatever reason.

I don't know much about BTC, but some folks in my network do. It's an interesting concept to me and a lot of people who would invest in private syndications are likely to be interested in BTC as well so to me it is a good marketing approach for a certain type of investor persona. It would be one who is bearish on our leaders and their ability to control monetary and fiscal policy who also wants exposure to CRE.

The best course is to find a small developer and figure out how to add value for them.  It's really an apprenticeship business and it would be hard to learn the ins and outs from a class.

Urban Land Institute has some decent materials if you're looking for study books and what-not, but to learn how things really work you'll need to do.