If you finally want to do it,
you know a lot about real

estate, and you think it's time
to start a Real Estate Fund? How

do you go about it? And what's
the process? Let's talk about

it.

So just how do you go about
starting a Real Estate Fund, you

know a lot about real estate,
and maybe you've invested quite

a bit yourself, but everything's
owned by you already. And you

want to grow, you want to make
more money, you want to own more

properties, or be a piece of
that. How do you start a Real

Estate Fund? Well, it always
starts with two things that you

are always always doing as a
syndicator, you are always

looking for investors, and
you're always looking for deals,

those two things are never gonna
go away, those are the most

important. Those are the fuel
for the fire, right? without

either of those, there is no
deal, there is no real estate

fund, no real estate, no fun. No
investors, no fun, it just as

simple as that. So you've are
always looking for investors and

deals, I like to think of it as
a funnel, because you're working

on these things all the time.
And you're sifting out to see

what exactly you're going to be
working on. As deals come in,

you need to be start identifying
and start choosing while these,

this is a possibility, this is a
possibility. This is a

possibility. And at the same
time, you get investors who are

thinking, hmm.

I'd invest in that. Right. So
investors are starting to think

that I'll invest in that and you
get an idea of who those people

are. Those are your prime
candidates for being in future

investors with you. As soon as
you think you have those best

properties, you now go into this
phase called underwriting. This

is the financial analysis model.
But more than that, because

underwriting is financial
analysis, but also with the

component of Do you personally
want to take this project on?

Does that meet your criteria of
what would be worthwhile? And

are you willing to put your name
on it? So underwriting becomes

the key thing. At some point, a
deal is found. And you've

identified that one deal that
you want to work on, you put the

deal under contract. And you're
done. Right? Wish it was so

well, you've got two things
going on. Now at the same time,

right, you've got this deal that
just went under contract. But

you've also got the security to
worry about this, so you've got

to do a contract, you need to
close and you've got a security

that you need to fund. So you've
got two things happening. You're

always going to be have the same
process. And in order to get the

deal done. As it relates to the
contract, right? You've got your

due diligence, you might have
some additional financing like a

loan. And then ultimately, you
have a closing. But your

question for being here as
probably more on the security

side, what exactly do you need
to do in order to do this

security? You've got people who
are raising their hands, right?

Have those people who are
raising their hands saying

they're interested, but how do
you get them from here, all the

way down to here? Well, it
starts with you need the proper

documentation now that you've
already identified those people

and you've got those soft
commitments. Soft commitments.

Now you need the paperwork that
lets you do this legally. You

need a PPM the ppm is what does
what you give to your investors.

It describes the entire
investment it describes the

terms that that are going to be
taking place. It lets your

investors know what the risks
are, what the conflicts of

interest that naturally exist in
your DLR. It gives them a firm

basis so that they understand
what they're going into. And

lets them know also wow if they
have additional questions, how

they can get a hold of you and
ask those questions. You also

need the operating agreement.
The operating agreement is the

rules for the road, it's what
tells the LLC that probably is

the basis of your syndication or
fun. Exactly what what it can

do. And what it can't do. It is
the manual, it is the law. It is

what it is what takes place, the
PPM explains the operating

agreement, but the operating
agreement itself is what

actually rules the day. But your
investors don't sign the

operating agreement, almost all
never. So they sign another

agreement called a subscription
agreement. So they sign a

subscription agreement. And what
that does, it binds them to the

operating agreement. It says in
exchange for this money that I'm

about to give you, I am entering
into this operating agreement as

a member of this LLC. And that's
what that does. So now you've

got your all of your legal
documents together, but you're

still not at the closing window
yet. Because this down here, you

still don't have any money, you
don't have their money. Yeah. So

you've got the documents in
place, this really now becomes a

process of I call latching. So
you've got the people that have

raised their hands, you've got
the documents, you need them to

latch on to your investment and
commit in order to do it. And

that's a lot of the work that
takes place in this whole phase

here. Your syndication attorney
is going to take care of the

documents and make sure that
those are all to getting done.

But this latching period is what
really kind of takes takes place

to make sure that we latch
properly, get your investors

lined up, get that money in, get
those signs, subscription

agreements, if you're doing a
506 C offering, get the

verification that they're an
accredited investor, and then

get their dollars so that at the
end of the day, you can go to

the closing table as well with
that money that you have that

you need. This is the broad
picture on exactly how you start

a real estate syndication. Now
under a Real Estate Fund, what

you're necessarily doing is
you're just not doing this part

quite yet. Right. So here your
underwrite, you're still

underwriting deals. And you're
coming up with your founder

investment theory. But you're
not necessarily doing that. But

you still need to do those other
things, you need to get these

the the documents in place to
latch those investors. The end

of the day, now you have this
big pool of money. And I

apologize that I don't know how
to draw a pool. But this big

pool of money as you're closing.
When that happens, as soon as

you start making sales, you're
filing your form D with the SEC,

and you're notifying the states

of where your investors are
coming from. And that's how you

start a Real Estate Fund. As
you've got this pool of money to

now you're putting it into
deals. Right, you're buying

different different assets for
them. And then you're just using

the money as as you need to,
you're using that money in order

to make those investments. And
the returns are going to your

investors in the way that you
promised them. Right. So they're

getting that money back. And
they then you it's just a matter

of keeping constant
communication, making sure

they're happy and know what
their money is doing for them so

that they keep investing with
you in the future. And this is

how you start a real estate
fund. I thought it was helpful

to draw this out. And I thought
it was helpful to also draw it

out as a syndication versus have
fun, because the only difference

really is you may not have a
transaction going at that time.

My name is Tilden Moschetti. I
am a syndication attorney with

the Moschetti syndication Law
Group. If we can help you put

together a syndication or a
fund, be happy to talk to you

about it. We specialize only in
Regulation D and in rules 506 B

and 506 C. We'd be happy to work
with Few we've worked with

people of all levels, people who
are just starting out who've

never put a deal together before
but know that they want to and

are committed to the process, as
well as large private equity

funds with over a billion
dollars under management. So we

service everybody in between. We
can help you please don't

hesitate to give us a call.