Finding deals that are open to 'sophisticated' investors'?

[Daniel Dietz]

Hello, 

Currently my partners and I have SFHs, duplexes and fourplexes. We have be researching going to more to maybe 8-16 units properties (the largest in our area for the most part) OR investing in other peoples deals like syndications. The issue with those is that none of us are 'accredited' but I think all three of us would qualify for the sophisticated designation.

I have found a couple of people who do allow for the sophisticated class of investor so far. 

What I am wondering is if there is a 'list' or website like Loopnet where a person can find syndicaters or other people who are looking for investors or partners that are do not meet the accredited but DO meet the sophisticated definitions?

Thanks, Dan Dietz

[Kim Lisa Taylor]

A few comments from my perspective as a Syndication Attorney: 

1) Where can you meet Syndicators who are doing deals for unaccredited investors? Go to as many networking and "guru" events where people are learning to buy the same thing you want to buy - for instance if you want to invest in Multi-family, find Multi-family trainers and go to their events. You'll learn how to buy your own, what to look for in a syndication, as well as meet others who are doing Rule 506(b) offerings that allow unaccredited investors. ReMentor's annual Ultimate Partnering events are the biggest networking events I know of (full disclosure, I sponsor this event and do training for them), but there are other trainers as well for multi-family who host live training events. It will pay off to get exposed to as many trainers (and their students) as you can.

Also, even though a syndicator has a 506(c) offering currently, they may do a 506(b) offering later on if they get contacted by enough people who are unaccredited to make it worth their while. Many current 506(c) syndicators have simply exhausted their current database of unaccredited investors in their previous deals and now have to do 506(c) offerings in order to advertise and fill their current deals. Bottom line, reach out to 506(c) syndicators and ask if they ever do 506(b) deals and if so, get to know them. 

2) Re your comment: "As far as the 'pre-existing relationship'" would I be correct in thinking for example if I heard a Syndicater on a BP Podcast, then I contacted them, maybe met in person a time or two to talk business and get to know them, conversed on the phone about real estate a dozen times over a year or so, that that would at least be a needed start where I could then ask then about current opportunities?" Sure, that's probably sufficient, but technically - the relationship begins when the syndicator knows enough about you to know whether you are accredited, or unaccredited but sophisticated. That's why a lot of syndicators might ask you to complete a pre-qualification questionnaire early in their relationship with you (or should). Additionally, the syndicator should follow up and take time to get to know you, and for you to get to know them. The SEC says it's more about the quality of the relationship than the quantity of time; but there should be a passage of time between when you first met and when they made you an offer to invest (more than hours or days); and they shouldn't be offering you "current or contemplated deals" that were in play at the time you first met - they should only be offering you future investment opportunities. Think of this like a dating relationship - the first meeting is to exchange contact info; followed up by a phone call or meeting to establish rapport and gauge common interests; followed up by further contact and/or education to ripen the relationship - all before the "marriage"/investment offer is made.