RG 019 Syndication Basics Part 3 – How To Raise Capital Legally With Mark Roderick

Reed Goossens
April 13, 2016

Show Notes:

 

In case you missed it, here are some of the highlights from Ep 19: Syndication Basics Part 3– How to raise money legally with Mark Roderick

roderick-mark-high

About Mark:

  • Over 30 years experience practicing law;
  • One of the leading crowd funding lawyers here in the U.S.;
  • He assists entrepreneurs and start ups with all facets of raising private capital;

 

Something Unrelated to Real Estate Investing:

  • Mark loves to ski!;
  • His favorite mountain is Jackson Hole, Wyoming;

 

Nuts and Bolts:

Syndication Basics Part 3– How to Raise Money Legally with Reg D

 

  1. Any time you are selling securities you either need to register with the SEC (Security Exchange commission), which is hugely expensive, or you meet exceptions stated in Regulation D (Reg D);
  2. In Reg D there are exceptions you can adhere to which means your offering doesn’t need to register with the SEC;
  3. Every state has its own set of laws when it comes to raising private capital (ie: a mini SEC in each state);
  4. Rule 506 (most popular): You can raise an unlimited amount of money as long as you are selling to accredited investors, but up to 35 non accredited investors;
  5. Under Rule 506 you can ignore all the state regulations, but not if you raise money under Rule 504 or 505;
  6. Accredited Investors: Either earn over $200k/year or have a net worth of more than a $1mill excluding your personal residence;
  7. Rule 504: Very simple, used when you are raising less than $1mill.;
  8. Rule 505: The least popular rule;
  9. Historically you can’t advertise your offering to the public under Reg D, however with the new JOBS act (506c) you can advertise!;
  10. Title III: Effective May 2016 – Allows everyone to participate (both accredited and non accredited);
  11. Crowd-funding = Syndication, it is one in the same except crowd-funding just uses the internet; it connects buyers and sellers directly;
  12. You need to prove that you are accredited in the new 506(c) rule:
    1. Show tax returns;
    2. Show your W2;
    3. Have your lawyer or CPA send a letter stating you are accredited;
  13. Non-Accredited investors don’t need to provide any documentation but they are limited to investing max. 10% of your net income, or net worth (Title III or Title IV), whichever is higher;
  14. PPM – Private Placement Memorandum (Disclosure document);
  15. New Rule 506(b) – the issuer is required to give a PPM;
  16. What do investors need to look out for? Invest only with people with good reputation; invest along with other people you respect;
  17. Biggest Mistake when raising capital? Not understanding how crowd-funding works, you need to be thinking mostly about marketing – Syndication, see a lot of sloppy deals (documents, financial projections very sloppy);

 

Top Investing Tips:

 

  1. Most successful habit? Have a plan and stick with it;
  2. Most influential tool in you RE business? His P.C. & One Note!
  3. What’s the most exciting project right now? So many projects! New crowd-funding portals
  4. Most influential person in your career? Rick Flaster – Founder of Flaster Greenberg Attorney’s

 

Where can people reach to continue the conversation?

 

Blog: markroderick.net or CrowdfundAttny.com

 

Ready, Aim, Fire!

 

Happy Investing!

 

Reed

Listen to Podcast

Recent Episodes​