Tilden Moschetti: One of the
phrases I often use to describe

the number of choices that you
have for exemptions from

registration under the SEC rules
is an alphabet soup, because you

have a huge number of choices,
and they all are just letters

and numbers. In this video
today, we're going to go through

what those choices are and how
you choose from a pretty high

level. But it should give you a
guideline to start from.

When I needed to put a
syndication together as my very

first one, I was a real estate
attorney. I hadn't done a

syndication yet my knew vaguely
what it was, but I never under

never looked into exactly how
I'd put one together. Suddenly,

a deal came to me and I needed
to suddenly make sense of what I

called the alphabet soup.
Because there were all these

different numbers 506b, 506c,
Regulation A, Regulation CF? And

how do they all fit together?
Well, in this video, we're gonna

go through what they basically
are and sort of how you choose.

So this video isn't going to go
into the specifics of them. But

it's going to offer you a sort
of a flowchart, if you will, on

making that decision. So in
order to do that, let's actually

draw out a flowchart that can
help you make that decision. So

we start at the start, right? So
we have, we have to start

somewhere. So the first question
that you may want to ask

yourself is, do I need to
advertise? Where are you going

to be getting your investors
from? Is it people that you

already know? Or is it people
that you don't know? And you

need to advertise to them? That
is a major key question. To

answer. Do we need to advertise?
If the answer is yes, it takes

us down one path? If the answer
is no, it takes us down another

path. So if the answer is let's
say, we know the answer is no,

you want to do this just with
some family and friends. But you

still want to put together a
syndication in the right way and

not commit a securities
violation by not doing it right.

Then we then you have to ask
yourself, then, do you want non

accredited investors?

Do you want to have be able to
have non accredited investors?

If the answer is yes, then you
have then you have two choices.

You can choose Regulation D.
Rule 504. However, 504 is

actually a very complicated
exemption, under Regulation D

Rule 504. The you basically need
to go through each state from

where your investors are coming
from, and analyze the deal under

each state specific security
laws, their blue sky laws to see

if it complies with that. And
then you have to do an analysis

to make sure that that the whole
deal applies to across the

board. Your other option is Reg
D. Rule 506b, like boy, under

Reg D Rule 506 B, you can
definitely take non accredited

investors. But you can all
you're limited to only 35 non

accredited investors in any 90
day period. So if you need to do

more than 35 in a 90 day period,
so you're doing a pretty large

raise. And you don't need to
advertise, maybe you would, but

you have to have non accredited
investors, you would probably

choose rule 504. But if you
don't need to advertise and you

want and 35 non accredited
investors in any 90 day period

is acceptable. Definitely
Regulation D Rule 506b. Many,

many, many of my clients more
than half of my clients do it

under 506b. If you do have to
advertise however that immediate

At least gets rid of rule 506b.
It's not even an option. Because

you have to add if if you're
going to make a general

solicitation to the world, then
it needs to go out to the

public. So if the answer is yes,
that you do need to advertise,

suddenly, then now we need to
ask again the question. Do you

want non accredited investors?

Right? If you don't want non
accredited investors, or you can

live without them, then the easy
answer is Reg D. Rule 506c.

Under Reg D Rule 506c, you can
raise an unlimited amount of

money from an unlimited number
of accredited investors, you

just have to go through an
independent verification that

they are in fact, accredited
investors. But this is probably

your least complex and most cost
effective for you route to go.

If you do need to have however,
non accredited investors and

advertise, you only have you
only have two options. And then

we asked ourselves this
question. And assuming that the

money works, because under Reg
CF, there's only $5 million that

you can raise under Reg CF. Our
Reg A you can raise up to 50

million with different tiers, of
course, but they're vastly

different in terms of
complexity, regulation, A is

very complex to do. It's very
expensive to do, because

basically you can think of it as
a mini IPO. Right? So but if I

if you need to advertise, and
you need to have non accredited

investors, you could. The other
question that you ask yourself

is, is it okay? That it only
goes through an SEC approved

portal, if all the traffic only
goes through that SEC portal

which will put its own fees on
top of it, and have control over

all of those investors. So if
you're okay with that, and the

fees, then you may want to
consider Regulation CF. A lot of

people come to me originally
thinking that Regulation CF was

going to be the easy way it was
going to be the cheap way.

Because basically they could re
advertise and do it with non

accredited investors. It's not
the cheap way. So Regulation CF,

many times the fees are in
excess of 10%, which vastly

hurts those returns that you're
trying to get your investors.

Not only that everything has to
go through that registered

portal. And the cost of doing
filing the form CF which is

required to do it, to have an
attorney prepare it most of the

time costs somewhere around
$10,000 or more. So Reg CF

offering oftentimes just doesn't
work because they're charging,

still this, you know, similar
fees to doing a Regulation D

offering. But then also you've
got this 10% portal fee and it

just kind of knocks it out of
the running as a possibility. If

they are not okay with doing it
through an SEC portal, then you

want your only option then is
Reg A. So right under Regulation

A you it's can be considered a
mini IPO. Now this is also kind

of like a registered
registration that takes place.

Because a package is put
together typically by an

attorney, because it's a very
complex document given to the

FCC who reviews it and make sure
it's up to their standards. And

in part of that review, there's
a lot of going back and forth.

Now fees in general that
attorneys charge for this can be

around $60,000 or more when they
put it together. Plus there

needs to most of the time be
audited financials that are also

part of that package. In the
total bill that I've heard that

most people are paying for
regulation, a product is over

well over 100,000 Somewhere
around the 100 to 150,000. Plus

it takes at least six months in
order to get through the process

in order to be able to start
your project, which probably

kills it for almost everybody
certainly in real estate, where

time is of the essence and we
need to do things quick clay,

most of the time Regulation A is
not a is not the best. In my

opinion, Regulation D Rule 506b
and 506c, certainly offered the

most opportunity and the fastest
results at a good price for

syndicators putting together a
fun for them. And that's why we

specialize just in Regulation D,
because it's, it's an answer

that we can do very quickly get
them the results that they want

fast, and then they can keep
growing from there. There's

nothing to say that you can't do
a Regulation D Rule 506 C

offering, at the same time be
putting together a Regulation A

offering, if that's the
direction you want to go, you

certainly can do that. So while
that time is tolling, you're

still gathering investors and
putting together your fun. So I

hope that helps you choose which
pathway makes the most sense to

you. If you'd like to talk more
about how you would do a

Regulation D Rule 506b or 506c
offering or you have something

already that in the works, where
that is definitely the right

choice for you. Feel free to
give us a call and we can talk

about your specific situation
and make a plan to get you from

where you are today to where you
want to go in the next six

months, three years, whatever
your horizon is