All Forum Posts by: Steeve Breton

Agreed. There is zero additional liability benefit to investing via an LLC as you are already a Limited Partner in the Syndication. Maybe anonymity benefit if you setup the LLC properly.

As a syndication sponsor I see lot of investors using their self directed IRAs.  Not the most tax efficient but works if that's where your money is and you're looking to diversify.   I believe @DongHui Patel mentioned having a Solo401k.  That's much better than an SDIRA.  

I agree with @Richard Neuharth about focusing your time on finding quality sponsors ... yes I'm biased :)

@Zak Boca I too grew up in Tech and have now invested in over a dozen syndications as a limited (passive) partner in the past 10 years.  I've invested mostly in multifamily but have also invested in a mobile home park, light industrial, oil an field, and a Yacht Club / Bed & Breakfast deal.  Email or message me if you want to setup a conversation regarding various asset classes and vetting sponsors/deals.    

As recommended above, you need to decide on the asset class and then get to know sponsors you can trust.  It takes time.

In full disclosure, I now sponsor multifamily syndications but am always happy have conversations with fellow investors and to refer you to sponsors of other asset classes. #abundance.

Seems to be the norm to charge 5-10% of the GP for guaranteeing the loan (bringing your net worth to the deal).  Depends on deal size.  I would charge more if the sponsor is relatively inexperienced, assuming you are more experienced and it's likely that you'll have to play a more active role.  That additional "Charge" would not be as KP.  For the more active role you'd look to receive additional GP equity/fees for due diligence, asset management, etc.  

@Michael Bishop I'd like to get confirmation on this: 

"from my understanding, once there is a non-accredited investor in a 506b deal, there are a few additional pieces of self-verification information that the Sponsor must collect, and once they have to collect if from NA folks, they must collect it from ALL."  Perhaps kim Lisa Taylor can chime in on this one.  I've had a mix of Accredited and Sophisticated investors in a 506b and the attorney said that it wasn't necessary to have the Accredited investors provide all the additional info.

@Joel Owens Agreed, I keep my min at $50k and figure if someone can't meet that then perhaps they shouldn't be looking to invest in our offering. 

Regarding " If an investor came to me unaccredited but wanted to invest substantially say 300k or 400k I might look at it".  I have had a Soph who wanted to invest $250k in his first real estate investment ever (my syndication).  I only accepted $100k and suggested he hold some for the next opportunity.

Just seemed like high risk of having a very needy investor for the next 5 years.  I even offered to introduced him to a fellow sponsor. 

Actually should have mentioned that I never take SSN via email.  I prefer to have the investor call me with it.  I then save or scan everything to an encrypted drive and shred any paper.  Ask your prospective sponsors how they handle sensitive/personal data.

Agreed. No need for an LLC from a liability perspective. It will also offer nothing in terms of tax benefit. Will cost you time and effort to create and maintain the LLC and then you have to have a separate tax return prepared for it.

I've invested in a dozen syndications using my personal SSN.  Just be sure you vet your sponsors well. 

Agreed.  Stay away from condos in general unless there is something special about your strategy or the type of condos you buy. 

@Alina Trigub & @Jay Hinrichs there are a few options regarding tax efficiencies for non-US citizens investing here. One example would be to setup an LLC in the US which is owned by an entity in the country of residence. Curious what other options there are for my friends and family to invest their hard earned loonies.

Hey Dino, nice job on the raise!  Yes, more liability but I've not been concerned with that to date, but like most contracts, nobody is all that concerned until things go sideways... or in the event of a water landing as @Jay Hinrichs said (I'm stealing that one by the way).

@Robert Borr  Great points.  Thanks.

@Michael Le  thank you for the direct answer. I agree.  Most of my investors are accredited too.

@Gino Barbaro , I'm with  you.  I'll keep going with 506(b) so long as my friends and family want to participate.  Though with an audience like yours you could probably raise > $10mm just by mentioning a 506(c) deal in one episode.

Hope to see a few more posts on this.  Still too early to call but I'm leaning toward this being a false claim.  More importantly It's good to hear some of the reasons why some might lean toward 506(c) with Accredited only... and hey, who doesn't want to advertise!

I just posted a response to another question where it was stated in the thread that "most syndicators are only taking accredited investors" (paraphrasing).  I'd love to hear from fellow investors on this.  Are people just echoing what others have said or is this statement actually true.  I know several larger orgs that I invest with who will only work with Accredited investors via 506(c) but I've also invested on a few smaller projects that accepted Sophisticated investors, or non-accredited, via 506(b).  I personally have accepted many sophisticated investors who are able to invest $50k or $100k at a time in syndications but they are just under the Accredited thresholds.  Other than the ability to advertise under 506(c), why wouldn't you just go with 506(b) and accept Sophisticated investors?

As @Michael Wang and @Alina Trigub mentioned, working investing in syndications can help you to better understand the process and learn a ton about how to, and not to, work in this business.  Invested with other sponsors for 5 years before stepping into the GP role.

I'm not sure why people continue to echo that "most syndicators require you to be accredited".  It may be that most of the largest syndicators only take accredited investors but there are many of us who are happy to work with non-accredited investors under rule 506(b).  The key is to reach out to establish/build the relationships so that you not only meet the SEC requirements but to also become comfortable with the sponsor/team you may be investing with in the future.  

@Akash Y. There are many posts here on BP regarding how to vet a sponsor.  Take that seriously to increase your chance of success.  

Btw, I'm also Canadian (Quebec) and have dual citizenship.  I've recently been speaking with other countrymen about investing in the US and would love to connect with you regarding what structures you've used ... EIN and/or ITIN, LLCs, etc.