anyone recommend some private lending or hard money syndicators?

[Andrew C.]

Looking to participate (passively) with funds form a solo 401k. Anyone have suggestions on specific syndicators or places to find them?

[Alex Breshears]

Hi Andrew!

This is a great question, and I will say some of that depends on what you are looking for and what type of investor you qualify as. For example, if you are a sophisticated investor (meaning you do not meet the qualfications set forth by the SEC as an accredited investor) that means you are limited to 506b offerings, and those require you to have a substantial business relationship with the operator.  If this happens to be the case, you will want to start reaching out to people in the space and just ask who they invest with and why, you can reach out to those teams and talk to them. They will require a certain amount of 'touch points' with you before they can give you details of the offering they have available.  If you qualify as an accredited investor, you can invest in both 506b and 506c offerings. 506c offerings are allowed to be publicly advertised, so they tend to be easier to find.

A word of warning. There will be a lot of legal jargon associated with the offering. The Private Placement Memorandum (PPM) is likely going to be 50+ pages of legal jargon outlining the terms of the offering, the risks associated with investing, what the operators can and cannot do with the capital, etc. Second will be an Operating Agreement. In these offerings, you are technically purchasing shares of a business, usually an LLC. The operating agreement will outline how the LLC is governed, how amendments are made, who manages the LLC, what rights you have as a share holder etc etc. This document is typically anywhere from 15 to 30 pages depending on the details the operator chose to include in the operating agreement. The last document is called a subscription agreement, and that is usually around 8-12 pages, which outlines HOW you are investing, WHO the purchaser of the shares will be, how many shares you are purchasing, etc etc. So combined, you could be approaching 100 pages of legal jargon. That's a lot for just about anyone! The reason I bring that up is you will live and die by those documents. They will outline your return, your risks, how you will receive distributions, when you will receive them, how long your capital MUST stay in the fund, what the process is to draw down the funds should you want to get them back after the lock up period. Spend some time not only getting acquainted with the operators, but also the paperwork. Ask questions, both of the operator and your own legal, financial and tax professionals. As a private lender that runs a fund and places her own capital, they are very different worlds, so if you have done any private lending yourself, just be prepared to learn a lot more information about real estate investing!

Good luck and happy hunting!