Raising money for a syndication

[Steve Chan]

I’m looking to educate myself on working with a money raiser, from a sponsor’s perspective. How are these arrangements typically structured and what are some good educational resources?

[Brian Geiger]

@Steve Chan

I assumed this is your first time raising money for a syndication. I always tell people that they should educate themselves prior to doing a Syndication deal. Unlike most Real Estate Investments, you will need to work with a lawyer that specializes in Securities. The SEC requires that you and your partner follow certain guidelines when you are providing an offering to investors. If you are working with a "Money Raiser",you want to make sure that either they are playing a role in your deal other than raising money, OR they are a licensed Securities Broker. If you have anybody raise money for your deal and they are not a Securities broker nor apart of the GP (i.e. Have ACTUAL RESPONSIBILITIES IN THE GP), you are running the risk of violating Securities laws. I highly recommend that you hire an attorney that specializes in Securities. 

In addition, you want to understand that if you are having Sophisticated Unaccredited investors in the deal, you CANNOT ADVERTISE THE DEAL!. There has to be a pre-existing relationship prior to them investing in your deal.  All the more reason why you should have a Securities Attorney. 

As far as some Educational Resources, I recommend the following books:

How to Legally Raise Money by Kim Lisa Taylor

Raising Capital for Real Estate by Hunter Thompson

Raising Private Capital by Matt Faircloth

Check out the below video. Apartment Syndicator Dan Handford interviews Dugan Kelley, a Securities Attorney regarding raising money for Syndication deals.

https://www.youtube.com/watch?v=I1s0D_8n0z0

HOWEVER, I can not stress this enough. None of the resources I provided should serve as a substitute for hiring a Securities Attorney. If you are going to raise money from investors, it is ABSOLUTELY ESSENTIAL that you have a Securities lawyer on your team. Kim Lisa Taylor and Dugan Kelley are both Securities Attorneys. You may want to reach out to them as a Start.

I hope this Helps,

Brian G.