How do you choose between doing
a Regulation D rule 506b offer

versus a Regulation D rule 506.
C offer? Let's explore the

differences and why you choose
one over the other?

Probably the question I hear
more than any other is how do I

choose between a Regulation D
rule 506b offer and doing a

Regulation D rule 506c offer?
Those two are different? How do

I do it? And so let's talk about
the differences. Regulation D

rule 506b says you can raise an
unlimited amount of money from

an unlimited amount of
accredited investors, just like

Regulation D rule 506c,
unlimited amount of money,

unlimited amount of accredited
investors, there's one

difference between the two of
them. And it comes in two

different choices. You've got to
choose either from taking

accredited non accredited
investors. So you may have up to

35 in any 90 day period, non
accredited investors under Rule

506b, you don't get that choice
at all, under Rule 506c, you

cannot have any non accredited
investors in rule 506.c. So why

wouldn't you just choose a rule
506c? Well, it's simple. Because

under Rule 506c, you can
advertise, see, under Rule 506b,

you need to have a significant
relationship with everybody that

you wouldn't have as an
investor. Because if you didn't

advertise to them, how did you
get the money? Right? That's the

question that has to be
answered. And it's answered kind

of in the negative, right?
Because you don't know. Well, if

if you didn't advertise? How
could How could you get the

money? So that's why you have to
have a relationship, otherwise,

there's no way you would have
ever found them to invest. So

the choice between there? So the
real question, when I get asked,

well, how do I choose? Which
one? The answer is simple? Where

do you think your investors are
coming from? Do you know a lot

of people who can invest in your
property, and you've talked with

them and kind of gotten a gauge
of that, oh, there's no problem,

I can raise $5 million from this
group of people. Now, it's not

just friends and family, like
friends, like your best friends

that you'd go drinking with.
It's really that you ever relate

a substantive relationship, such
that your investors feel like

they can pick up the phone and
ask you a question. And you feel

like you have a general
understanding of the their level

of sophistication. So that's the
definition of knowledge. But so

you've got a pretty big sphere,
if you think about all the

people that you know, you may
have a pretty big fear, and it

may be possible for you to raise
all that 5 million. And if it is

rule 506b is probably the best
choice, because you don't have

to go through an additional step
that is under Rule 506c. And

that's verification that they
are in fact accredited. You see,

when you choose rule 506c, you
get all the benefits of getting

to advertise. But you can't make
the mistake of assuming that

somebody is coming into the
investment, just because you

think they might be an
accredited investor. And they

said that they're an accredited
investor, you actually need a

third party to raise their hand
and said, I know this person.

And yes, they are indeed an
accredited investor, I put my

license on the line to say
that's true. So those people are

the accredited investors under
Rule 506c, they have to be

verified. That's why what I say
it's just easier to do a 506b if

you actually already have that
relationship, because they're,

whether they're whether they're
an accredited investor or not.

It's really up to their self
selection. You just need to have

a good faith belief that they
are in fact probably a good an

accredited investor. If they say
they are. So 506b five succeed,

look at your network and decide
well, where are these people

coming from? Are they coming
from there? Or am I really going

to need to advertise to meet
have people invest with me who I

just don't know yet. And those
people eventually then you will

know and you can include them as
part of a 506b. So I hope that

helps. My name is Tilden
Moschetti. I am a syndication

attorney with this Moschetti
syndication Law Group. We focus

exclusively on Regulation D rule
506b and 506c offerings.