All Forum Posts by: Grant Shipman

Hey BiggerPockets Community,

If you’re raising capital for real estate syndications, you need to be aware of SEC regulations—because one wrong move could put you in serious legal trouble.

Many new syndicators think they can just start pooling money from investors without following the proper rules. That’s a massive mistake. The SEC enforces strict guidelines on raising capital, and violating them can lead to hefty fines, investor lawsuits, and even criminal charges.

Let’s break down some key takeaways from SEC Rule 506(b) of Regulation D and why you MUST have a Private Placement Memorandum (PPM) and Subscription Agreement in place.

1. No General Solicitation or Advertising

Under Rule 506(b), you CANNOT publicly advertise your investment deal. That means:
🚫 No posting on social media
🚫 No blasting your deal to an email list of strangers
🚫 No promoting your syndication on a podcast

The SEC is clear: “No general solicitation or advertising to market the securities.”

If you want to publicly advertise, you’d need to use Rule 506(c)—which requires investor verification and limits you to accredited investors only.

🚨 Warning: If you advertise a 506(b) deal publicly, your entire offering could be invalidated, leading to legal consequences.

2. You Can Only Have 35 Non-Accredited Investors

Rule 506(b) allows an unlimited number of accredited investors but restricts you to only 35 non-accredited investors.

However, there’s a catch:

• Non-accredited investors must be financially sophisticated.
• They must have enough experience to evaluate the investment risks.

From the SEC:

If you’re planning to include non-accredited investors, make sure they qualify—or you could be violating SEC rules.

3. Full Disclosure is Required for Non-Accredited Investors

If any non-accredited investors participate in your deal, you must provide them with detailed disclosure documents.

The SEC states:

This is where having a Private Placement Memorandum (PPM) and Subscription Agreement becomes absolutely necessary.

A PPM outlines:
✅ The risks of the investment
✅ The structure of the deal
✅ The terms and conditions
✅ The use of funds

A Subscription Agreement ensures:
✅ Investors acknowledge they understand the risks
✅ They meet SEC requirements
✅ They legally commit their capital

🚨 Not providing these documents could leave you vulnerable to investor lawsuits.

4. Investors Receive "Restricted Securities"

Syndication investors receive restricted securities, meaning:

• They can’t freely sell their shares like a stock.
• They must hold the investment for a certain period.

Additionally, you must file a Form D with the SEC within 15 days of the first sale of securities.

5. States Can Still Require Additional Filings

Even though 506(b) offerings are exempt from state registration, individual states can still require notice filings and fees.

This means you need to check with each state where your investors reside to ensure compliance.

Final Warning: Don’t Cut Corners – Follow the Law!

Too many new syndicators think they can get away with skipping legal requirements—but the SEC isn’t playing around.

If you’re raising capital, DO IT RIGHT:
✅ Use a PPM & Subscription Agreement to protect yourself and your investors
✅ Avoid general solicitation (unless using a verified 506(c) offering)
✅ Understand accredited vs. non-accredited investor rules
✅ File your Form D and comply with state laws

🚨 Failing to follow these regulations could mean SEC fines, investor lawsuits, or worse. 🚨

***quotes copied directly from SEC.gov ****

Questions for the Community:

1️⃣ Have you seen capital raisers violate these rules? What happened?
2️⃣ Do you always use a PPM & Subscription Agreements for your syndications? Why or why not?
3️⃣ What’s your strategy for educating investors about SEC compliance?

Let’s discuss below! 👇👇👇

Hey BiggerPockets Fam,

I've been doing Co-Living now exclusively since 2017, and the numbers speak for themselves. Co-living is how I went from renting a room, Delivering Dominos, no savings, and not being able to qualify for a loan to financial freedom & a $2M net worth in 15 months.  Now you can use it to "start cooking with gas".  Here's the facts why! 

1. Higher Demand

The rental market is shifting. One-person rental units are in the highest demand, and co-living directly appeals to this market. Shared housing provides affordable, flexible rental options for young professionals, remote workers, and students.

As shown above, co-living properties have more demand than traditional two-bedroom units and appeal to a wider tenant base.

2. Lower Start-Up Costs

Traditional real estate investing requires 20%-25% down, making it difficult for many to scale quickly. However, co-living allows you to acquire properties with as little as 0%-5% down, drastically reducing the amount of cash required.

Instead of needing $100K+ to buy a rental, a co-living strategy lets you start with a fraction of the cost while achieving higher returns.

3. Higher Returns

Co-living generates up to 5X the cash flow of a traditional rental. Why? Because instead of collecting one rent check per month, you’re collecting multiple payments from different tenants. It's like selling pizza by the slice!

A traditional single-family rental may net you only $280/month, whereas a co-living setup can bring in over $1,100/month from the same property.

4. Less Risk

With traditional rentals, if your one tenant fails to pay, you’re in trouble. Co-living, on the other hand, mitigates this risk by creating multiple income streams. If one tenant moves out, the property remains cash-flow positive. Additionally, it's easy for a house on one lease to get absolutely trashed by the renter. However, in Co-Living the most a renter can trash is their room. When you have multiple responsible adults sharing a house, if one "bad egg" slips in then you have the others renters to kick them out or report them. Additionally, in Co-Living the property manager walks the property once per month to deliver toilet paper & cleaning supplies (aka property inspection).

Co-living provides built-in diversification, lowering your financial risk compared to single-lease rentals.

5. Investors Love It

One of the biggest challenges in real estate is raising capital. Traditional deals often don’t excite investors—offering $200/month in cash flow isn’t very compelling.

But with co-living, you can offer 5X the returns, making it much easier to secure funding.

Now, instead of asking an investor to put up a 20% down payment for $200/month cash flow, you can pitch them a 5% down investment yielding $1,000+/month—a much more attractive deal.

Why Co-Living is the Future

Co-living isn’t just another strategy—it’s a high-demand, high-cash-flow, lower-risk investment model that aligns with today’s rental market trends. By leveraging shared housing, you can:
✅ Lower your initial investment
✅ Maximize cash flow
✅ Reduce financial risk
✅ Make better deals for investors

Questions for the Community

1. What's your initial thoughts on the above?
2. Have you tried co-living in your market yet? What challenges or successes have you experienced?

Looking forward to hearing your thoughts and continuing to learn together!

Hey BiggerPockets Fam,

I've been doing Co-Living now exclusively since 2017, and the numbers speak for themselves. Co-living isn’t just an alternative to traditional rentals—it’s a way to maximize cash flow, lower risk, and attract investors.

To make this post more insightful, I’ve included graphs and visuals that break down the key benefits of co-living and why serious investors should be paying attention.

1. Higher Demand

The rental market is shifting. One-person rental units are in the highest demand, and co-living directly appeals to this market. Shared housing provides affordable, flexible rental options for young professionals, remote workers, and students.

As shown above, co-living properties have more demand than traditional two-bedroom units and appeal to a wider tenant base.

2. Lower Start-Up Costs

Traditional real estate investing requires 20%-25% down, making it difficult for many to scale quickly. However, co-living allows you to acquire properties with as little as 0%-5% down, drastically reducing the amount of cash required.

Instead of needing $100K+ to buy a rental, a co-living strategy lets you start with a fraction of the cost while achieving higher returns.

3. Higher Returns

Co-living generates up to 5X the cash flow of a traditional rental. Why? Because instead of collecting one rent check per month, you’re collecting multiple payments from different tenants. It's like selling pizza by the slice! 

A traditional single-family rental may net you only $280/month, whereas a co-living setup can bring in over $1,100/month from the same property.

4. Less Risk

With traditional rentals, if your one tenant fails to pay, you’re in trouble. Co-living, on the other hand, mitigates this risk by creating multiple income streams. If one tenant moves out, the property remains cash-flow positive.  Additionally, it's easy for a house on one lease to get absolutely trashed by the renter. However, in Co-Living the most a renter can trash is their room.  When you have multiple responsible adults sharing a house, if one "bad egg" slips in then you have the others renters to kick them out or report them.  Additionally, in Co-Living the property manager walks the property once per month to deliver toilet paper & cleaning supplies (aka property inspection). 

Co-living provides built-in diversification, lowering your financial risk compared to single-lease rentals.

5. Investors Love It

One of the biggest challenges in real estate is raising capital. Traditional deals often don’t excite investors—offering $200/month in cash flow isn’t very compelling.

But with co-living, you can offer 5X the returns, making it much easier to secure funding.

Now, instead of asking an investor to put up a 20% down payment for $200/month cash flow, you can pitch them a 5% down investment yielding $1,000+/month—a much more attractive deal.

Why Co-Living is the Future

Co-living isn’t just another strategy—it’s a high-demand, high-cash-flow, lower-risk investment model that aligns with today’s rental market trends. By leveraging shared housing, you can:
✅ Lower your initial investment
✅ Maximize cash flow
✅ Reduce financial risk
✅ Make better deals for investors

Questions for the Community

1. -What's your initial thoughts on the above? 
2. -Have you tried co-living in your market yet? What challenges or successes have you experienced?

Looking forward to hearing your thoughts and continuing to learn together!

What do you think of my essentially 7-word answer? 

"It's like selling pizza by the slice".  

Too simple? Just right? How would have you answered? 

7 Steps to Choose Your Property Type: Niche to Get Rich & Super-Niche to Get Super-Rich

Hey BP Community!

Are you trying to narrow down the perfect property type for your first coliving investment? I’ve put together 7 steps to help you decide, stay focused, and get that much closer to achieving your financial goals. Let’s dive in:

1. Don’t Do Multiple Property Types

Avoid the temptation to juggle different property types. In this game, sticking to one property type is your fastest path to mastery. Why suffer through multiple learning curves when you can focus and perfect your approach?

2. Choose a Property Type and Stick With It

I learned the phrase “rinse and repeat” from the BiggerPockets guys—and it’s a game-changer. High performers everywhere swear by it. Start niching down now, master your chosen property type, and don’t pivot until you’ve got it dialed in.

3. Do You Already Have Rentals?

• Yes? Great—stick with what you know! Most property types can work for coliving, so leverage your existing expertise.
• No? Proceed to Step #4.

4. Detached Houses

When in doubt, consider the tried-and-true detached single-family house. These homes are what most people picture as “home” and lend themselves well to coliving strategies. Why? Because they’re ideal for creating comfortable and functional shared living spaces.

5. What Works Best?

Successful coliving properties focus on creating strong, household-led communities. The best setups have:

• 5-11 members (ideally 6-8).
• 1 bedroom per member.
• 1 bathroom for every 3 members.

Look for properties with these specs:

• 6-8 bedrooms.
• 2-4 bathrooms.
• Ample parking (street or otherwise).

Detached houses fit this formula beautifully, but other property types can work too. Just make sure they meet the criteria.

6. Seriously—Pick a Property Type

Detached houses might be the easiest to work with, but the real key is committing to a property type. Don’t stress about perfection—choose what feels right and move forward.

7. Stick to Your Type

Warren Buffett once said, “The difference between successful people and really successful people is that really successful people say no to almost everything.”

Apply this principle here:

• Decide on your property type.
• Say no to anything outside of that type.

You can always pivot down the road, but starting with focus is crucial to building momentum. Real estate is vast—narrowing down your niche will help you achieve results faster.

That’s it! Keep it simple, stay consistent, and success will follow. What’s your preferred property type, and how did you decide on it? Share your thoughts in the comments below—I’d love to hear how you’re approaching this!

Looking forward to your feedback and discussions! 🙌

1. Ineffective or Absent Conflict Resolution Process

Every successful group of people needs an effective conflict resolution process characterized by:

• simplicity to understand and remember;
• quickness to start and complete;
• a clear vocabulary.

My company, Livingsmith uses and recommends the 5-on-5 Process for conflict resolution in co-living homes.

2. Poor or No Communication Platforms

Effective co-living communication platforms are characterized by:

• 1) usability
• 2) accessibility
• 3) commitment of involvement

This can be done through house email lists, whiteboard, group texts, etc. If someone needs everyone in the house to know something, they have a usable and accessible way to do that along with the confidence others in the house will see the message.

3. Low or No House Identity

People want to take pride in where they live. If you give your co-living home a name and vision statement, then tenants will take pride in their house and prospective tenants will be able to self-filter.

4. Wrong Property Management Approach

It doesn’t matter how good the people who are doing the property management are, if they are not using a property management approach designed for co-living, everyone loses.  The wrong property management approach will lead to the dreaded three:

• 1) high drama,
• 2) high turnover,
• 3) high property damage.

Use Household-led Property Management (HPM) developed and perfected for co-living.

5. Not Understanding “Household”

Household means “the individuals living together and how they live together.” There’s two components of household:

1. 1) the “who”
2. 2) the “how”

“Who” is living together is easy: that’s the tenants. “How” they live together is more involved. Every household has a “how”, whether written, spoken, or unspoken. Sharing understandings and rules on guests, cleanliness, chores, pets, drinking, drugs, boundaries, house identity, conflict resolution, communication platforms, etc. If a tenant doesn’t like both the “who” and the “how” of the household they live in, they will not live there long. If a tenant does like both the “who” and the “how”, they will live there for years.

6. No Complete Household System

A complete household system is all about “the how” of a household. You want the “how” to be complete, reasonable, consistent, and flexible. Surprisingly, the “how” beats the “who” any day.

• -The right “who” will be lucky if they finally figure out the right “how” before parting ways in frustration.
• -The right “how” will attract the right “who” and discourage and weed out the wrong “who”.

Me and my property management team developed the a 40-Point Complete Household System to not leave the “how” to chance. Use a good “how” and you’ll get the best “who” every time.

 I'm happy to help!  Also, check out Jon's podcast if you haven't yet! 

As a property owner, what innovative techniques have you implemented to cultivate a thriving co-living community? Share your experiences and stories—your tips might inspire others to improve their own spaces!

Hi Dee, you can find our podcast on Spotify, Apple Podcasts, and YouTube. Just search for 'Livingsmith: Co-Living Gold Standard Investment & Property Management,' and you should be able to locate it. I’m not sure if I can share external links here. Hope that helps!