All Forum Posts by: Nate R.

Coming to town for this. Should be good!

I have heard good things about the Old Capital conference in Dallas. I was thinking about going in October.

If he offered a preferred return for his non-accredited fund, I would be more likely to do it. I'm guessing the lawyers said he can't use complicated compensation structures like waterfalls. 

I have relationships with sponsors that offer straightforward and relatively investor-friendly 80/20 splits (no preferred), so I choose to continue funding those kinds of deals. But I still haven't ruled out CC at some point. I appreciate the fact he's opened up his deals to the "small guy."

The need has to do with the amount of money being raised, not the investor accreditation. Every syndicator has a base of investors that they can tap to fund deals, but to keep growing, they need to be able to reach new investors. That's why they partner with equity-raisers, advertise deals to the general public or offer them on crowdfunding platforms. 

Certain types of SEC exemptions don't allow them to advertise to the public unless they are for accredited investors only, but for Reg A offerings they can. 

Because it has become cheap to service a high volume of investors using technology, there are now more companies doing offerings with low minimums to non-accredited investors using these new regulations (like Cardone Capital, Fundrise, Realty Mogul, etc).

What pool of capital is larger: the pool of accredited investor money (what is that, 1% of the general population) or the general public's?

Depends on the asset class. Multifamily had a 0.4% default rate in the last recession, so it is generally considered less risky compared to other types of commercial real estate. Besides complete loss of principal, there is risk that returns are lower than projected.

Hi John, there is a specific legal definition of "Accredited Investor" in the US. It defines a minimum net worth or income that investors must meet.

There is a different category called "Sophisticated" for investors with knowledge and experience. I am in the Sophisticated category due to education/training I received from an investor group, and experience as an investor.

Whether a sponsor accepts Accredited, Sophisticated or anyone depends on the offering type. There are a lot of rules about the various offering types and investor accreditation to "protect" investors from fraud or making unsuitable investments.

The JOBS Act is making it easier for companies to raise money from the public and imposes minimal requirements for suitability. Cardone's crowdfunded fund is open to all categories of investors, but the aggregate sales to an individual investor who is not accredited cannot exceed 10% of his/her net worth or income. 

I am thinking about taking a flyer on Cardone Capital Equity V with a small investment. I like his videos and podcasts about real estate. Seems to be focused on Class A, large properties that could be acquired by REIT's and PE funds. He boasts of a long track record.

The fund holding period is 10 years, so it requires a long-term commitment. This is different from many of the syndications I've seen, where the sponsor tries to give your money back within 5 years.

I am in some syndication deals but due to not being accredited, I don't see many opportunities to invest in Houston, Atlanta, Florida and other areas that GC invests in.

I live very close to this neighborhood. One thing worth noting is the low-income, "affordable housing" in WB. I occasionally hear about shootings in the area. There are good and bad pockets.

https://nextcity.org/daily/entry/austins-housing-authority-flexes-new-muscles-in-expansion

I wouldn't let that deter me from investing, but maybe there are areas with better potential.

 Oh, good point. It might be different if you're raising money for someone else's deal.