What are the SEC requirements for soliciting private money?

[Daniel Hart]

I remember awhile back being told that if you are small-time, say a few hundred thousand dollars borrowed, there is an easier/cheaper registration process.

Can anyone point me in the right direction? I have a dozen single family homes all cash flowing nicely, but I'm about to run out of spare cash to buy and need a partner. I buy $20k-$35k houses that rent for $700-$900/month, and the lost opportunity is killing me!!

Thanks

[Tammy R.]

BE CAREFUL when advertising for PML. Know the SEC guidelines. It is not illegal to advertise, however GENERAL solicitation IS!!! The following items are not allowed ever:

==> Advertising in newspapers, Craigslist, radio, billboards
==> You can NEVER guarantee ANYTHING! (Nothing is guaranteed)
==> You can NEVER say 'SAFE' (IE Your money is Safe with our investment) (This is kind of along the lines of guarantee. Nothing is ever safe. Nothing is ever guaranteed.)
==> You can NOT advertise your returns. (IE Make 10% or more on your money by investing with me now!)
==>You can NOT come out and say 'I'm Looking for Investors!'

If you solicit with fliers, make it about teaching someone about how to become the bank, or how to transfer their sitting 401K funds from old jobs into a self directed IRA to invest wherever they want and the requirements for doing so.

The first and best way is to tell everyone you know personally about your business and the opportunities that are out there. You can solicit the particulars ONLY if you have a personal relationship with them, meaning, you know their financial situation is and have qualified them as able to do private lending (some states only allow 10% of a person's net worth to be used for private financing). Examples are Coworkers, neighbors, your doctor, lawyers, CPAs, other investors or entrepreneurs, etc. Here are some legal and accepted ways to advertise for private lenders.

Here are 3 simple ways to legally and safely advertise
*Luncheons (Keep it GENERAL,like I explained above for advertising)
*Work with a mortgage broker (one that specializes in investment property financing) (they act as a middle person to find the private lenders. They’ll examine the offering and market it to their private lenders for you)
*Online Marketing (if you do that, its fine, you MUST make sure not to DETAIL your offer!) Mention what your COMPANY does, successes; BUT password protect your OFFERINGS and documents. People must have to jump through hoops to get to your offering! (This is why I'd be careful what you put on a flier)

THE RULE OF 45: It you are cold calling (meaning trying to get someone you do not know to do private lending with you), there is a 45 day wait period, in which you MUST have communication with the person on at least 3 occasions (can be email, direct mail, etc) but ONE of them must be in person or by telephone within the 45 days.