Syndication - Purchase PPM Template Online?

Question

I am interested in syndicating my first MF this year. Is it recommended to purchase a PPM Template online to give to your SEC Attorney to review/edit to save time and money of having the attorney draft from scratch?

If so, what site would you recommend? Does anyone have a PPM copy they'd be willing to share? I definitely don't mind paying but just uncertain about the direction to take. Thank y'all!

Michael Le · Answer

I think in the end it might cost you more for your attorney to go through and vet that all the information in your template is correct. Any SEC attorney worth their salt would probably decline using it and if you insisted, probably would not work with you.

Just budget $10-20k for an SEC attorney and another $2-5k for transactional attorney as part of your closing costs. You only lose that money if you fail to close as otherwise it would be paid out of the funds raised in the syndication.

Kris Benson · Answer

Khalil,

Keep in mind that in a syndication of any deal the PPM and LP Agreement are the documents that govern the relationship between the investors and the sponsor.  Just like you are completing your due diligence on the property you wish to syndicate don't overlook the due diligence on your real estate attorney.  They can be the difference between success and massive failure/litigation.

So many of us who have found success in real estate can point to a great team around us who has provided guidance and wisdom and I count my attorney as part of that team.  Not sure where you are looking to syndicate but if its in NY message me and I would be happy to be able to provide the referral to my attorney.

Also check out the following link

https://bootstraplegal.com/realestate/

I have never worked with them but the CEO is speaking The Best Ever Real Estate Conference next week in Denver, CO.  Looks like a really innovative way to approach legal services.

Hope that helps.

Kris

Tyler Kastelberg · Answer

@Garrett White

Contact @Dominic Bouchard

He runs a neat startup that might be able to save you considerable money on legal costs. I haven't used them, but I intend to give them a chance on my next syndication.

Todd Dexheimer · Answer

Start and finish with your securities attorney. They will have a "boilerplate template" already and will be familiar with it.

Abel Sng · Answer

@Garrett White if you're using an SEC attorney let them tell you what you need in the PPM. Main thing you'll want to walk through with them is the company agreement or operating agreement. This is where it will spell out the structure of your LLC, how distributions will be made, etc. FYI, not all SEC attys are equal. This is an area worth spending a few more bucks on. To give you an idea, we pay ours $15k an offering. This gets paid by the LLC at closing so you shouldn't have to come out of pocket for it.

Good luck!

Kyle Bryant · Answer

I'm almost certain that any securities attorney you talk to will have several forms (or completed PPMs) that they draw from to draft new ones. They're already familiar with them and know how to make the right changes in the rights places, rather than looking at a new document without "home field advantage." I can't imagine there's an SEC lawyer out there that starts from scratch, but I could be wrong.

Weina Shi · Answer

@Andrew Campbell

Hi Andrew, a little dated post but would you mind sharing your PPM attorney’s contact information?

Garrett White · Answer

Thank y'all for the advice! I have researched the local attorneys, and have reached out to my SEC attorney to begin reviewing my business plan and marketing material to ensure we stay compliant. Thanks again!

Dominic Bouchard · Answer

@Garrett White

Agree with @Kris Benson on lawyer due diligence.

Let's face it, if lawyers were free (or very cheap) almost nobody will ask the question should I hire one or not.

This is complex stuff, often case by case specific and time-consuming. Plus we're all trying to sleep well at night.

This is why it's a pretty good reflex to find a way around such as a boilerplate template. Some are available for free or for a low cost on the Internet. Here's the thing:

For simple contracts its a very usable solution. You just need to be sure those contracts are compliant with your states and are designed for the intended purpose (BP did an awesome job putting those together: http://get.biggerpockets.com/forms/index/)

But when a lot of money is in the balance or complex/specific things are required, it might not be the best solution.

Here's why:

1. Chances are you're going to need an attorney anyway to finalize the document. In that case, you'll need a lawyer that will accept to work with your template which is rare since they all use their own template. Why? Because they know its good quality and its state compliant so they don't have to waste time checking it all over.

(It's possible that you know a very good attorney that will not charge you for that (revision) but it's rare)

2. Time - getting in par with all the intricacies when filling a template yourself can cost you more time than hiring a lawyer (again, if it's fairly simple then it's a different story)

3. Peace of mind: Lawyer's work comes with an insurance - their signature. If something needs to be revised or goes wrong, they're responsible.

4. Last but not least, a good lawyer will also provide valuable info on how to conduct your affair in the future or what you should look out for. This, to me, is the most important part. You want professional advice and should come more intelligent after getting it.

In sum, for PPM copy, getting an online template is not best.

Hope that helps!

PS:

@Tyler Kastelberg   Thanks for the mention!

Michael Le · Answer

Obviously I'm no lawyer but I don't think it is important. Most of the laws regulating this are federal laws. Obviously there will be some state specific items but any good lawyer will know that too. For what it's worth, my lawyer is based out of CA for my deals in TX.

Syndication - Purchase PPM Template Online?

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