Marketing under Reg D 506(b)

[John Stanczak]

Hello all, 

New to BP and just getting started with a RE Syndicate. Have a question about legal requirements to market ourselves as an investment opportunity.

We have our eyes on a local 16-unit, and want to start looking at raising capital. We started a FB page for our LLC that essentially advertises the syndication construct, and encourages people to reach out to me to discuss becoming a capital partner. The idea would be to get on the phone, talk them through our business model, then detail any specific property offering we might be raising capital on. After that, we'd work out an OA.

I just got off the phone with a syndication attorney and he suggested I need a securities license to advertise like that. I'm not trying to limit to accredited investors, so I looked at two things from 506(b): 1) Issuer must have a substantive, pre-existing relationship with investors; 2) General solicitation or advertising of the securities is prohibited. 

Some questions here: Are Facebook "friends" substantive relationships (from a legal perspective)?  If I'm only advertising the model (not a specific property), is that still a security? How have others handled the advertising piece to bring on non-accredited investors?

Thanks for the help!