Soliciting Investors & Avoiding Securities Laws
I need suggestions on how you put together a deal and dealt with Regulation D or other Security laws.
Please be specific. If your deal fell under an excemption, tell me how you found investors and how you legally avoided structuring your offering as a "security" to avoid SEC regulation.
We are putt together a 100-200 unit deal in Dallas and working with investors. We will be managing the investment for a %. We have done several other, but these have been smaller 40-60 unit properties. We would like to structure this deal and do not want complications with the SEC.
Thank in advance.
Jon Strishak
Kelvin,
We have spoken to attornies, most of which advised not to pursue the deals. These attornies are not investors. I am interested in how we can avoid the securities laws legally.
We know exactly how we would like to structure with a LP holding the property and LLC as the general manager.
Can you give any further advice?
Thanks,
Jon
[ Edited by kelvin_REI on Date 08/22/2007 ]
sorry if this is redundant, but finding "friends and family" or accredited investors is what you want to do. As an accredited invest there is a reg d loop hole.
I have been looking at an email and direct mail campaign. You can rent the names of accredited investors. I have not idea of the hit rate.
Violating state and fed securities law have major penalties.
Have you considered finding a securities/corporate atty that is also RE savvy?
you can also simply obtain a financial institution from a country such as Uruguay where there are no SEC laws and do business under that umbrella.
cjmazur,
Thanks for the tip. This is probably the best way to go about it.
jjets4,
If we pursued your method, I doubt we would be in business much longer. We would be a foriegn corp, but doing business in TX. This would subject us to Texas Law and SEC regulation. If we were a foriegn corp, this wold not protect us.
Jon
cjmazur,
We are currently checking with our attornies,. but we wanted to get the advice of experienced investors as well.
Thanks,
Jon
ypochris,
Thanks for the specific comments. I will see that our operating agreement includes those lines. I am particularly interested on how we can and cannot solicite investors. Any comments on this?
Should I avoid all, but accredited investors or can I include friends and associates who do not meet these standards? Also, would I be able to hold seminars and solicite investors whether or not they are accredited?
Thanks,
Jon
In the case of the LLC I am referencing, it is all friends and family...
Chris
I had an interesting f/u conversation w/ my atty. He suggested a basic offering cicular anf the finding investors. Based on what type of investor they are then apply the appropriate exemption.
e.g.
if friend and family, then you that
if accredited then use that.
I got this info from an mail list broker that there is some 30? day in length (?) requirement that you have has to be there, for phone, email solicitations. So it has to be an existing relationship.
e.g.
If my screener (for an addition $50/hr from this guy) talks to you today asking generally are you interested in RE investment and you say yes, than bingo in 30 days I can solicit you.
I need to stop use "f/u". I had a person from the county call me back that was seriously offended.