Aspiring Investor looking into setting up 1st syndication

Aspiring Investor looking into setting up 1st syndication

Investor · Los Angeles · Member since 2021 · 16 posts · 10 votes

Hey Everyone,

I have several SFH properties in Los Angeles, and would like to acquire more knowledge and get some answers in order to get into my 1st syndication. I have a few friends that would participate financially, and I would be the sponsor on a small multifamily property. I would like to start setting up the syndication, but I do not know what type of an attorney or accountant I need to help me with this process, or the cost associated. Your advice would be greatly appreciated. Who do I need to talk to begin. Please don't tell me I need to network and raise the funds, I don't need to raise the money for this one, I have the investors (non accredited) I need to get the ball rolling and if you have any professional contacts that can help me achieve this, please share them. I understand that syndication 506B would be an expensive endeavor vs setting up an LLC with a few friends and purchasing the property this way, but I personally would like to build experience by setting up the syndication, with my friends as passive investors, once I go through all the steps and troubles etc and learn, I can then go bigger on the next project. Thank you for your help in advance.

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Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
4y

This quote makes me nervous. 

I have seen a lot of people post on this forum "You don't need to go to all that trouble. Just create an LLC." Sure, 90% of the time nothing came of that, but it is a violation of the law and could cause you BIG problems later. If you are taking money from people and they are expecting you to provide profit to them, you have created a security and should be filing under one of the SEC exemptions. Reg D 506(b) sounds appropriate given what you said. FWIW, most people that create real estate syndications use LLCs to hold the property, so the LLC is not the issue. The real key is following SEC law correctly.

There are numerous SEC attorneys out there and because they work on Federal laws, you don't need one from your local area.  

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  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    4y

    This quote makes me nervous. 

    I have seen a lot of people post on this forum "You don't need to go to all that trouble. Just create an LLC." Sure, 90% of the time nothing came of that, but it is a violation of the law and could cause you BIG problems later. If you are taking money from people and they are expecting you to provide profit to them, you have created a security and should be filing under one of the SEC exemptions. Reg D 506(b) sounds appropriate given what you said. FWIW, most people that create real estate syndications use LLCs to hold the property, so the LLC is not the issue. The real key is following SEC law correctly.

    There are numerous SEC attorneys out there and because they work on Federal laws, you don't need one from your local area.  

  • Specialist · Member since 2021 · 322 posts · 273 votes
    4y

    Would echo finding a lawyer who is very familiar with real estate and SEC filing procedures. 

  • Member since 2022 · 64 posts · 47 votes
    4y

    I'd recommend looking up Gene Trowbridge. He's a real estate attorney with an emphasis on syndications.

  • Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    4y

    A good attorney familiar with PPM's and Operating Agreements will be able to set you up on the legal side.

    I also suggest dialing in your GP/LP structure and the underwriting side of things.

  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y

    @Atanas Petrov

    If you need a syndication attorney I have used mine for six deals and we just got sec qualified on a reg a offering in 3 months so they know what they are doing and pricing is very reasonable

    7e investments53 Reviews
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