Sophisticated investors in syndication

[TJ Addison]

Hi all! I have a long term interest in doing a syndication deal or two. In my initial research and education I have noticed most of the syndicates interviewed in podcasts and blogging only accept money from accredited investors. Is there anyone out there doing syndications with non-accredited investors? I read somewhere, a way to get some education on these types of deals is to join one as an LP. As an LP you will see all the documents and have a way to ask questions regarding the deal. I thought that was a great idea but I'm not accredited. Any response from someone with syndication experience as a sponsor or an LP would be greatly appreciated! Thanks TJ

[Jillian Sidoti]

Hi -

Hopefully I can help with this. With a syndication, you can carve out a TIC interest using a Tenant Inc Common Agreement. There would be two separate investors - an LLC (where all your investors who do not have a 1031 are) and then the 1031 investors as individuals (or however they owned their previous property.) All of these investors (the LLC plus the 1031 investors) would be on the title of the property in a tenant in common ownership. However, one cannot invest directly into the LLC with a 1031 - hence a TIC carve out. You can also have a DST. All still have to follow securities laws.

About DSTs: Your property may not be appropriate. I suggest googling "7 deadly sins of DSTs" This will be helpful.

As for Rule 506(b) offerings: you can take up to 35 sophisticated investors. Those investors must be sufficiently sophisticated to understand the risks associated with investing. I hope this helps.