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Welcome to Target Market Insights. A podcast to help real estate investors navigate neighborhoods through the lens of local experts. In each episode, we speak to local specialists to learn about their market, useful tips, and the latest trends and developments. This show is designed to help you with the insights you need to win your target market.

May 7, 2019

The SEC has set forth clear guidelines of what is acceptable when raising capital for real estate. Nonetheless, some investors have made missteps that have exposed them to harsh punishments. To understand the dos and don’ts of raising capital, we sat down with securities attorney Kim Lisa Taylor.  Kim is the founder of Syndication Attorneys whose sole purpose is to help entrepreneurs create sustainable, successful investment companies. On this episode, she clarifies the difference between a JV and a security, what constitutes a pre-existing relationship, and why you need to have a customer relationship marketing (CRM) system.



Partner: Get Your Early Bird Tickets to the Midwest Real Estate Networking Summit



Key Market Insights

  • Involved in writing over 300 private security offerings – mostly real estate
  • Securities come into play when borrowing money from a private investor
  • If it’s a one-time deal, there are not many risks with securities laws – especially if they are accredited investors
  • When doing it multiple times, you are a serial borrower
  • Can have someone in an LLC that is member managed and they are actively involved in generating a profit and not relying on you
  • Members of member managed LLCs should have access to the bank account and be involved in the decision-making
  • If filing as a JV Partnership: don’t have too many members, works best with 3-4 people max
  • Hire a security attorney after you have a signed sales agreement, visited the property, and reviewed the last two years of income statement
  • Once you know you are creating a manager managed LLC, you need to decide how to comply with securities law
  • Options are to register or look for an exemption – since registration takes up to 9 months, individual deals require an exemption
  • Private exemptions will prohibit public communications - cannot blast on Facebook, buying a list or advertising
  • Can extend offerings to investors with a pre-existing relationship
  • VC Citizen Court Case – defined the pre-existing and suitability relationship
  • Operators must have a method of determining whether an investor is suitable to be in an offering and a record keeping system
  • Reg D 506b – allows an unlimited number of accredited investors, up to 35 sophisticated investors, can self-qualify
  • Reg D 506c – crowdfunding rule, allows you to advertise to investors, but they must certify they are accredited from an attorney or CPA
  • If you don’t have experience, you can always borrow someone else’s experience
  • 506c may allow you to advertise and then put them in a 506b deal
  • Whales = wealthy investor who will take down one deal
  • Think of Moby Dick as he destroys the ship and the crew
  • Common mistakes operators make: Waiting too long to hire a security attorney, need 3-4 weeks to have the offering put together and then it needs to be approved by the lender
  • Passive investors can request to see inspection report, survey
  • Subscription docs include (PPM) – details all aspects, Operating agreement – details how all decisions will be handled, subscription agreement – qualifies the investor for the deal



Bull’s Eye Tips:

Winning Your Market: Preparation

Tracking Market Changes: Subscription to LexisNexis, Securities Mosaic

Daily Habit: Miracle Morning



10 Things Investors Should Know Before Investing in a Real Estate Syndication


Determining Investor Suitability

CRM Systems: Insightly, Hubspot, Podio, Salesforce

Best Business Books:

Miracle Morning by Hal Elrod


How to Create an Effective To Do List by Damon Zahariades 



Digital Resources

Asona for Project Management


Tweet This:

“Operators must have a method of determining whether an investor is suitable to be in an offering”


“There are predators who will take your deal and can push you out”

“With a private offering, you cannot blast deals on social media”



Places to Grab a Bite:

San Augustine, FL – Salt Life



Connect with Kim Lisa Taylor:


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