What's the legal way to solicit private money for a Commercial RE Deal

[Brandt Tingen]

I am coming across a commercial RE deal and need to raise capital to buy out one of the current owner's 50% stake.  I will likely need to raise 300 - 700 thousand.

• How do I solicit these investments with regards to legal compliance?  Does anyone definitive books, webinars, articles, etc. on the subject?
• Is a preferred rate of return enough for investors to bite?  Or are they going to want some equity?  Reason I ask is I don't want the other owner to be able to force my hand into selling down the road.

[Bryan Hancock]

There really isn't enough information in your post to answer it properly.  There are new regulations about generally soliciting for accredited investors under 506(c).  You should try doing some online searches and learning more about that.  I'm assuming you'll need to solicit generally from the context of your post and that you don't have an pre-existing and substantive relationship with accredited investors such that you could use a (b) exemption. 

There really aren't any good new books on the new regulations that I know of.  If others know of any please let me know.  Sam Freshmen's book on syndication is a good read as is Gene Trowdbridge's book called "Its a Whole New Business."  The latter title is rather broker-centric for my taste, but it has good information nonetheless.  He targeted the book at the CCIM community from what I can tell.  

Joel Block is hosting a symposium in Austin, TX in 2015 you may consider attending.  Gene Trowbridge also hosts events nationally several times a year that you should consider attending.  

From what you have posted I would think a preferred equity security may be of interest to investors.  Something that gets paid in preference with some upside is typical for the part of the capital stack you're targeting.  A lot depends on how you plan to add value to the project, what the cash flows look like, your exit assumptions/plan, etc.  Again, there isn't enough information in your post to help much.  My suggestion would be to find a good securities attorney that knows how to design offerings that will sell (not just to protect their interest) and to find a syndication coach of some sort that can help you understand the business side.  A local developer that is doing what you're trying to do would be a great choice for that.