Syndications and Private Placements By Rich Hake Ph. D., Esq.
We Will NOT Discuss <ul><li>Private Lending </li></ul><ul><li>Hard Money </li></ul><ul><li>Partnerships </li></ul><ul><li>...
Different Kinds of OPM   <ul><ul><li>Debt </li></ul></ul><ul><ul><ul><li>“ Private Lending” </li></ul></ul></ul><ul><ul><l...
<ul><li>An organized group  </li></ul><ul><li>Pooling resources  </li></ul><ul><li>To work toward a common goal </li></ul>...
What Kind of Deals? <ul><li>NON traditional investments </li></ul><ul><ul><li>“ Basket” deals </li></ul></ul><ul><ul><li>R...
Real Estate Syndications Seed the development
<ul><li>Experts = expertise, decisions </li></ul><ul><li>Investors = money, ROI </li></ul><ul><li>Opportunity = deal, “con...
Systems and Teams “ …  after two years and a hundred thousand dollars, I thought I would have to drop this and go back to ...
<ul><li>Define Ownership </li></ul><ul><li>Define profit split </li></ul><ul><li>Define roles </li></ul><ul><li>Define val...
<ul><li>Development </li></ul><ul><li>Startups </li></ul><ul><li>Flipping </li></ul><ul><li>POOLS </li></ul>Define your Pu...
Blue Sky Laws <ul><li>&quot;speculative schemes which have  </li></ul><ul><li>no more basis than so many feet of  </li></u...
SEC v. W.J. Howey Co. <ul><li>Investment of money  </li></ul><ul><li>In a “common enterprise” </li></ul><ul><li>With “expe...
SEC   v .  EDWARDS <ul><li>“… .an investment scheme promising a fixed rate of return can be an “investment contract” and t...
Do’s and Don’t  of Raising Capital <ul><li>Solicitation rules </li></ul><ul><li>Accredited investors </li></ul><ul><li>Sop...
Federal AND State <ul><li>Every state has its own too! </li></ul><ul><li>Rule 147 </li></ul><ul><li>Government “protects” ...
<ul><li>“ No solicitation”  laws  </li></ul><ul><li>Do not apply to  </li></ul><ul><ul><li>People you know </li></ul></ul>...
Accredited investors— <ul><li>Regulation D-  501 </li></ul><ul><ul><li>Millionaires </li></ul></ul><ul><ul><li>High income...
Resources http://www.seclaw.com/bluesky.htm
Not just ANY money <ul><li>1031 exchanges </li></ul><ul><ul><li>TIC </li></ul></ul><ul><li>IRS and Developer – Dealer </li...
<ul><ul><li>LLC, Trust, IRA, Partnership, Corporation, Charity, Person (foreign or US) </li></ul></ul><ul><li>C Corp </li>...
<ul><li>Any number of different interests </li></ul><ul><li>Any management structure </li></ul><ul><li>Any membership inte...
<ul><li>A/B  </li></ul><ul><li>Manager Run </li></ul><ul><li>Pass through taxation </li></ul><ul><li>No LP –  GP problems ...
Announcement <ul><li>Rock stars make it an event… </li></ul><ul><li>SELL TO SCARCITY </li></ul><ul><ul><li>Public payouts ...
<ul><li>Business plan </li></ul><ul><ul><li>NOT a solicitation or AD </li></ul></ul><ul><li>Generates Interest </li></ul><...
<ul><li>Offering MEMORANDUM </li></ul><ul><li>Requires an RSVP </li></ul><ul><ul><li>Subscription Agreement   </li></ul></...
<ul><li>Rules of engagement </li></ul><ul><li>Formulaic </li></ul><ul><li>The commitment test </li></ul><ul><li>Numbered, ...
<ul><li>I understand the RULES AND RISKS of the ball,  </li></ul><ul><ul><li>and hereby apply for a ticket… </li></ul></ul...
<ul><li>Tracking </li></ul><ul><li>Certifications </li></ul><ul><li>Cannot pay, cannot play </li></ul><ul><li>Subscription...
<ul><li>Rules of engagement </li></ul><ul><li>The dirty details </li></ul><ul><ul><ul><li>Who is in charge </li></ul></ul>...
<ul><li>Announcement </li></ul><ul><li>Offering </li></ul><ul><li>Subscription </li></ul><ul><li>PPM </li></ul><ul><li>Agr...
<ul><li>Make sure you define the deal </li></ul><ul><li>Make sure you define the roles </li></ul><ul><li>Make sure you hav...
<ul><li>Think the “unthinkable” </li></ul><ul><li>Death </li></ul><ul><li>Divorce </li></ul><ul><li>Bankruptcy </li></ul><...
<ul><li>Define rules today </li></ul><ul><li>Fix the  $$  amount now </li></ul><ul><li>save  $$  later </li></ul>Buy - Sell
<ul><li>“ Bankable” package </li></ul><ul><li>“ Smells like success” </li></ul><ul><li>Equity in deal - “loanable” </li></...
Tools Save Toil <ul><li>Know which rules apply to your deals  </li></ul><ul><li>  (and what does not) </li></ul><ul><li>Ge...
<ul><li>Evaluate a Syndication </li></ul><ul><li>Prepare a deal for Syndication </li></ul><ul><li>Doing your own Syndicati...
Syndication Home Study Course BYOB   $697 Syndication Quickstart Course $1,995 Forms CD $2,495 20 HR Audio Set 20@ $250 ea...
<ul><li>Syndication Quickstart $797 </li></ul><ul><li>BYOB  Free </li></ul><ul><li>Forms CD   Free </li></ul><ul><li>20 HR...
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Syndications And Private Placements

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Ideal 4 Investors Online Seminar on creating syndications and private placements for buying real estate. For more info, www.ideal4investors.com

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Syndications And Private Placements

  1. 1. Syndications and Private Placements By Rich Hake Ph. D., Esq.
  2. 2. We Will NOT Discuss <ul><li>Private Lending </li></ul><ul><li>Hard Money </li></ul><ul><li>Partnerships </li></ul><ul><li>Subject to </li></ul><ul><li>Foreclosures </li></ul><ul><li>REITs </li></ul><ul><li>TICs </li></ul>
  3. 3. Different Kinds of OPM <ul><ul><li>Debt </li></ul></ul><ul><ul><ul><li>“ Private Lending” </li></ul></ul></ul><ul><ul><li>Equity </li></ul></ul><ul><ul><ul><li>Syndications </li></ul></ul></ul><ul><ul><ul><li>Private Placements </li></ul></ul></ul><ul><ul><li>Hybrids </li></ul></ul><ul><ul><ul><li>“ Convertibles ” </li></ul></ul></ul>
  4. 4. <ul><li>An organized group </li></ul><ul><li>Pooling resources </li></ul><ul><li>To work toward a common goal </li></ul><ul><li>To achieve synergy in </li></ul><ul><li>Profits, efforts, and results </li></ul>What is a “Syndication”?
  5. 5. What Kind of Deals? <ul><li>NON traditional investments </li></ul><ul><ul><li>“ Basket” deals </li></ul></ul><ul><ul><li>Redevelopment projects </li></ul></ul><ul><ul><li>Subdivisions </li></ul></ul><ul><ul><li>A gold mine in Colorado </li></ul></ul><ul><li>Value Added </li></ul><ul><li>BIG </li></ul><ul><li>Uses Leverage </li></ul>
  6. 6. Real Estate Syndications Seed the development
  7. 7. <ul><li>Experts = expertise, decisions </li></ul><ul><li>Investors = money, ROI </li></ul><ul><li>Opportunity = deal, “convergence” </li></ul><ul><li>Purpose = exit, business plan </li></ul>Team meets a DEAL
  8. 8. Systems and Teams “ … after two years and a hundred thousand dollars, I thought I would have to drop this and go back to teaching… we did more in two months than in the past two years using your team and your system. Thanks again…” David and Marc, Tomahawk, WI
  9. 9. <ul><li>Define Ownership </li></ul><ul><li>Define profit split </li></ul><ul><li>Define roles </li></ul><ul><li>Define value of exit </li></ul>Valuation of Contributions
  10. 10. <ul><li>Development </li></ul><ul><li>Startups </li></ul><ul><li>Flipping </li></ul><ul><li>POOLS </li></ul>Define your Purpose
  11. 11. Blue Sky Laws <ul><li>&quot;speculative schemes which have </li></ul><ul><li>no more basis than so many feet of </li></ul><ul><li>'blue sky'&quot;; </li></ul><ul><li>&quot;to stop the sale of stock in fly-by- </li></ul><ul><li>night concerns, visionary oil wells, </li></ul><ul><li>distant gold mines and other like </li></ul><ul><li>fraudulent exploitations.” </li></ul>
  12. 12. SEC v. W.J. Howey Co. <ul><li>Investment of money </li></ul><ul><li>In a “common enterprise” </li></ul><ul><li>With “expectation of profits” </li></ul><ul><li>SOLELY through the efforts of another </li></ul><ul><li>328 U.S. 293 (1946) </li></ul>
  13. 13. SEC v . EDWARDS <ul><li>“… .an investment scheme promising a fixed rate of return can be an “investment contract” and thus a “security” subject to the federal securities laws….” </li></ul><ul><li>540 US 389 (2004) </li></ul><ul><li>Deeds of Trust as “securities” </li></ul><ul><li>www.corp.ca.gov/enf/enforce.htm </li></ul>
  14. 14. Do’s and Don’t of Raising Capital <ul><li>Solicitation rules </li></ul><ul><li>Accredited investors </li></ul><ul><li>Sophisticated investors </li></ul>
  15. 15. Federal AND State <ul><li>Every state has its own too! </li></ul><ul><li>Rule 147 </li></ul><ul><li>Government “protects” YOU from YOU!! </li></ul>
  16. 16. <ul><li>“ No solicitation” laws </li></ul><ul><li>Do not apply to </li></ul><ul><ul><li>People you know </li></ul></ul><ul><ul><li>Referrals </li></ul></ul><ul><ul><li>Acquaintances </li></ul></ul><ul><ul><li>Accredited investors </li></ul></ul>Solicitation
  17. 17. Accredited investors— <ul><li>Regulation D- 501 </li></ul><ul><ul><li>Millionaires </li></ul></ul><ul><ul><li>High income earners (>200K) </li></ul></ul><ul><ul><li>Charities, trusts, corps, partnerships (>5M) </li></ul></ul><ul><ul><li>Banks, insurance companies, investment companies </li></ul></ul>
  18. 18. Resources http://www.seclaw.com/bluesky.htm
  19. 19. Not just ANY money <ul><li>1031 exchanges </li></ul><ul><ul><li>TIC </li></ul></ul><ul><li>IRS and Developer – Dealer </li></ul><ul><li>IRAs </li></ul>
  20. 20. <ul><ul><li>LLC, Trust, IRA, Partnership, Corporation, Charity, Person (foreign or US) </li></ul></ul><ul><li>C Corp </li></ul><ul><li>S Corp </li></ul><ul><li>LP </li></ul><ul><li>GP </li></ul><ul><li>LLC </li></ul>A word about entities…. <ul><ul><li>Which Entities should you use for raising capital? </li></ul></ul>
  21. 21. <ul><li>Any number of different interests </li></ul><ul><li>Any management structure </li></ul><ul><li>Any membership interest </li></ul><ul><ul><li>Can represent the different talents and contributions of the team </li></ul></ul>LLC Flexibility
  22. 22. <ul><li>A/B </li></ul><ul><li>Manager Run </li></ul><ul><li>Pass through taxation </li></ul><ul><li>No LP – GP problems </li></ul><ul><li>Short, bright life </li></ul>Why we use an LLC
  23. 23. Announcement <ul><li>Rock stars make it an event… </li></ul><ul><li>SELL TO SCARCITY </li></ul><ul><ul><li>Public payouts </li></ul></ul><ul><ul><li>Conference call announcements </li></ul></ul>
  24. 24. <ul><li>Business plan </li></ul><ul><ul><li>NOT a solicitation or AD </li></ul></ul><ul><li>Generates Interest </li></ul><ul><li>“ If accepted….” </li></ul>Announcement is…
  25. 25. <ul><li>Offering MEMORANDUM </li></ul><ul><li>Requires an RSVP </li></ul><ul><ul><li>Subscription Agreement </li></ul></ul><ul><ul><li>Tellable, SELLABLE story </li></ul></ul><ul><li>“ We are having a PRIVATE party” </li></ul><ul><ul><li>“ We have not invited anyone yet” </li></ul></ul>Private Offering-PP
  26. 26. <ul><li>Rules of engagement </li></ul><ul><li>Formulaic </li></ul><ul><li>The commitment test </li></ul><ul><li>Numbered, tracked, you want no “flunk outs” </li></ul><ul><li>“ If you come to this event, this is what MIGHT happen…” </li></ul>Offering memorandum
  27. 27. <ul><li>I understand the RULES AND RISKS of the ball, </li></ul><ul><ul><li>and hereby apply for a ticket… </li></ul></ul><ul><li>If you accept this invitation please send me…. </li></ul><ul><li>“ Engraved invitation…” </li></ul>Subscription Agreement
  28. 28. <ul><li>Tracking </li></ul><ul><li>Certifications </li></ul><ul><li>Cannot pay, cannot play </li></ul><ul><li>Subscription Agreements allow you to accept their offer…. </li></ul><ul><li>“ Please invite me….” </li></ul>Subscription = CYA
  29. 29. <ul><li>Rules of engagement </li></ul><ul><li>The dirty details </li></ul><ul><ul><ul><li>Who is in charge </li></ul></ul></ul><ul><ul><ul><li>Who gets paid and when </li></ul></ul></ul><ul><ul><ul><li>“ What if’s”… </li></ul></ul></ul><ul><li>When the deal ends </li></ul><ul><li>“ Ticket to the event” </li></ul>Operating Agreement
  30. 30. <ul><li>Announcement </li></ul><ul><li>Offering </li></ul><ul><li>Subscription </li></ul><ul><li>PPM </li></ul><ul><li>Agreement </li></ul>Private Placement (Recap)
  31. 31. <ul><li>Make sure you define the deal </li></ul><ul><li>Make sure you define the roles </li></ul><ul><li>Make sure you have a Plan B </li></ul>Before the Entity
  32. 32. <ul><li>Think the “unthinkable” </li></ul><ul><li>Death </li></ul><ul><li>Divorce </li></ul><ul><li>Bankruptcy </li></ul><ul><li>Corruption </li></ul><ul><li>Lawsuits </li></ul><ul><ul><li>Members or the entity </li></ul></ul>Preplan…
  33. 33. <ul><li>Define rules today </li></ul><ul><li>Fix the $$ amount now </li></ul><ul><li>save $$ later </li></ul>Buy - Sell
  34. 34. <ul><li>“ Bankable” package </li></ul><ul><li>“ Smells like success” </li></ul><ul><li>Equity in deal - “loanable” </li></ul><ul><li>Huge Deals work </li></ul><ul><li>No “creative” way </li></ul>Why use Syndications?
  35. 35. Tools Save Toil <ul><li>Know which rules apply to your deals </li></ul><ul><li> (and what does not) </li></ul><ul><li>Get a simplified “rule book” </li></ul><ul><li>Get examples of the paperwork </li></ul><ul><li>Learn what the experts know </li></ul><ul><li>(and don’t know) </li></ul><ul><li>See one, do one, teach one </li></ul><ul><li>Attract money and deals </li></ul>
  36. 36. <ul><li>Evaluate a Syndication </li></ul><ul><li>Prepare a deal for Syndication </li></ul><ul><li>Doing your own Syndication </li></ul>
  37. 37. Syndication Home Study Course BYOB $697 Syndication Quickstart Course $1,995 Forms CD $2,495 20 HR Audio Set 20@ $250 ea.= $5,000 1-1 deal consultation $2,000 Total $12,187
  38. 38. <ul><li>Syndication Quickstart $797 </li></ul><ul><li>BYOB Free </li></ul><ul><li>Forms CD Free </li></ul><ul><li>20 HR Audio Set Free </li></ul><ul><li>1-1 deal consultation Free </li></ul>Syndication Home Study Course

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