Episode 10: Show Notes.
There are so many ways to get in trouble in the syndication business! For example, how are you finding investors? Are you allowed to advertise? How do you set up a syndication? How do you resolve issues or disputes?
The legal formation at the beginning is the foundation of everything! Learn how to do it right with Kim Lisa Taylor, founder of Syndication Attorneys, PLLC. She'll explain the main rule in syndication in detail: Regulation D Rule 506(b). Know and understand the rules so you wouldn't get involved in a deal where somebody's breaking the law and get in trouble eventually. Listen to this episode now!
Key Points from This Episode:
- Learn about the main rule that everybody – syndicators and investors – should follow: Regulation D Rule 506(b).
- Rule 506(b) allows somebody to put together a group with an unlimited number of accredited investors and 35 non-accredited but sophisticated investors.
- This rule prohibits finding investors through any means of general advertising or solicitation.
- Kim explains how the syndicator can prove that they have a substantive relationship with their investors before making investment opportunities available to them.
- Kim expounds on why it's a legal requirement for syndicators to ask investors questions about their finances.
- Kim shares the best practice for documentation and why it's important to have an investor management platform.
- Kim talks about her book and why it is helpful for both the syndicators and investors.
- Kim mentions specific information that people should know before they invest in a syndication.
- The best and most successful ones are those whose documents are written in plain English that people can understand what they're getting into, what to expect, and when to expect it.
- When you're investing in a real estate syndicate, you're investing for the duration of time that that property is owned, which could be indefinite.
- Kim talks about making sure you understand the property before you invest in it.
- What other information should the sponsor be able to provide?
- What if something happens and you need money? Could you withdraw your investment?
- What if the members have a dispute with the management?
- What do you need to consider about voting rights?
- Kim believes that you shouldn't invest if you can't see a way that the sponsor is getting paid while you're owning the property. Why?
- What is a private placement memorandum required by the SEC?
- What would Kim like to do to make the syndication industry better?
"I think it's very important that everybody understands what they're getting into and what the rules are that they should be following." [00:04:58]
"You really don't want to be part of a deal where somebody's already breaking the law, because either they're ignorant of the law, or they're in denial that it applies to them when it actually does. So, they're going to, eventually, they're going to get caught and get in trouble. " [00:10:51]
"The more you understand, the better." [11:42]
Links Mentioned in Today's Episode:
Syndication Attorneys website
How to Legally Raise Private Money: The Definitive Guide to Syndication and Raising Money for Real Estate and Small Business by Kim Lisa Taylor
How to Legally Raise Private Money: The Definitive Guide to Syndication and Raising Money for Real Estate and Small Business by Kim Lisa Taylor (Free E-Book)
Multi-Family Millions: How Anyone Can Reposition Apartments for Big Profits by David Lyndahl
About Kim Lisa Taylor
Kim Lisa Taylor is a nationally recognized corporate securities attorney, speaker and the author of the No. 1 Amazon best-selling book "How to Legally Raise Private Money". She is the founder of Syndication Attorneys, PLLC, Startup Securities Law LLP, InvestorMarketingMaterials.com, and SyndicationEducation.com, whose collective purpose is to provide quality legal advice, plain English offering documents, professionally designed marketing materials, and education for clients who are raising money for real estate, startups or growing companies. Kim has been the responsible attorney for hundreds of securities offerings and is listed in the 2020 Top 100 Attorneys and Top 100 in Finance magazines. She helps clients nationwide.