All right. Thanks for joining us
today. It is one o'clock in

Raleigh where I am right now.
And thanks for joining us. I've

got a bunch of people in which
is terrific. So we're going to

go through some questions that
that you have, we're going to

feel free to use the q&a portion
that you'll see in zoom, and we

will answer what is coming in as
we go. And just let me know,

I've scheduled about 45 minutes
for this call. So hopefully,

we'll, we'll hit that we may run
slightly over

there. We'll go from there. Sue.

First question that we have, is
there any support? Such as legal

review of the acquired property,
legal entity maintenance after

finished drafting of the
document? That's good question.

The answer is no. So what we do
at Moschetti Law Group is we're

primarily concerned with your
security itself. So we're

concerned with how you deal with
investors, how you present

yourself, making sure you're
protected by the SEC. My license

covers national things such as
securities licenses, like

securities, but it doesn't
necessarily go to different

states. So I'm licensed in
California, I'm licensed in

Washington, DC, if you are
outside of there, I can't offer

you specific legal advice as it
relates to whatever state it is,

if there was a legal issue about
that acquired property, for

example, title, I'm not going to
be able to give you the legal

advice to it many times for my
clients, I can give them kind of

my opinion as a, as a real
estate professional or as a

syndicator. But it's not legal
advice, and I will probably

still refer you to an attorney.
If you have a specific legal

issue. I hope that answers that
question there.

Another question, what LLCs? Do
I need to start my syndication?

It's probably one of the top
three most common questions I

get so happy to answer that for
you. Let's go to I have a

whiteboard here that makes that
a little bit easier to explain.

So there's two different LLC
typically that we form, it's a

service that we also offer, when
you sign up for a package, we,

we generally do the formations
it's fine if you already have

them set up, but we'll also do
them for you if you don't.

So there's two entities here.

This is

building so I'd say it's a
property

So, generally, there are is two
entities we form

oops, I made that totally ugly.

Those are little like seals on a
thing. So this is what I call

the sponsor entity.

And this is what I call the

boss My sheep this is what I
call the investment entity

and so, the title is owned by
that investment entity, it is

this investment entity is
managed

by the by the sponsor entity.

And then your investors.

They all invest into that
investment entity. So there's

typically two

two different entities. Now in
cases where there is a several

different properties

will normally set up SPVs or
special purpose entities

for each of those, which is then
managed by the investment

entity. So that answers that
question.

Another question is how do I
handle timing differences for

different investors in a given
fund when calculating returns?

Great question. Also same issue
with timing different projects.

Investments in the same fund.
Okay, George, good question. So,

this is God talking about two
different

I think so there's two different
kinds of funds in the world or

two different kinds of
syndications. There's open ended

funds, and there's closed ended
funds. So about maybe 60 70% of

our clients do closed ended
funds. And that's you've got a

single asset, or a single group
of assets, you have investors

come over a limited time period.
So you're raising money for

three months, six months,
whatever it is, they all go in

together, and they all come out
together, that's called a closed

ended fund. The difference is an
open ended funding George, you

probably know this, but I'm
giving background just for the

other people as well.

So in a closed ended fund, that
what that does is it is open in

time. So you may have investors
coming in in month one, you may

have them coming in, in month
nine, you may even have them

coming in like the year later.
So what Giorgio is asking about

is this challenge here, where
you've got

erase everything.

Where if we look at it on a
timeline

and this, let's say q1,

q2,

q3, q4,

et cetera, where you have an
investor coming in here, and

you've got for, say, 100k. And
you've got an investor coming in

here, for 100k. So the challenge
comes up, because this 100k Here

is more valuable to you, at this
point, than it is at this point,

right? It's time value of money,
they're coming in at different

points. And if you're saying at
the end, we're going to be

paying you a return of 40%, or
30%, or whatever it is, this guy

here, this, this guy who came in
before the end of a for q1

happen, he's getting
disadvantaged, so he is being

he's not getting the full
benefit, because he would much

rather wait till q4 In order to
put his money in. So there's

really one main way to deal with
it. And then there's a couple

kind of variations to deal with
it. The main way is by

calculating the net asset value
at these different points in

time. So you count the net asset
value here, you calculate the

net asset value here.

And you go, and what that
essentially does is you'd say,

okay, the whole value of the
entire portfolio, let's say is 5

million here. And then in q2,
now, maybe it's five whoops, 5.2

million. And now maybe in q3,
maybe something slightly

happened, where it's now 5.1.
But then it jumps up to 5.5

million.

And then you divide out this
amount by the total amount of

membership units that there are.
And so basically, what you're

coming up is the cost per
membership unit. So you're

selling those membership units
to this investor, for 100k, for

100k. And then each quarter,
you're doing a reassessment of

what that net asset value is.
Now in the example of

what what you don't want to have
happen is basically to be saying

that this person is getting
diluted at the same time. And

that's how, why we do it this
way. Because we also don't want

to be just adding shares, or
membership units here in here in

order to make up the difference,
because that just dilutes that,

that person. So that's kind of
the main way we deal with it.

The second way to deal with it,
is by doing an accounting.

So what we can do, where we get
basically can get rid of the

idea of net asset value.

And come up with accounts for
each one of your investors and

build a ledger for each one of
them. So let's say I have

investor one who comes in here.
And let's say this is investor

17. Just for sake of argument,
I'm doing deals and this is

really for a portfolio not for a
single, single asset.

So I know that here I've got
these properties here. And I

allocate as evenly as I can at
the time of the person

Investing, or at the time of
acquisition, I'm allocating

percentage of ownership of each
one of those.

Each one of those assets, almost
like its own little mini fund,

it's a little account that
you're keeping track of. And

then as those get disposed of,
it gets the roll off. This is

probably the harder way to keep
track of it in a lot of senses,

especially if there's a lot of
transactions coming in, or if

there's, but it's probably the
only way to do it if you've got

large gaps of time of when
between acquisitions and

dispositions and when your
investors are trickling in. So

kind of a complicated question.
That's how it's dealt with, most

almost always is one of those
two ways. But you know, like I

said, we can go through and come
up with some other ideas about

whatever meets your particular
need as well.

Sure, Tom, we can talk about, we
can talk about fees, my fees and

finance, we charge flat fees,
we're very competitive about

what we charge. So we charge for
a closed ended fund, we charged

$15,000 as a flat fee.

And for a open ended fund, we
charge $25,000 as a flat feet.

Now, that's only for the first
deal. Once you become one of my

clients, we give a guarantee
that for the next three years,

it's going to be discounted by
50%. So that if you're doing

closed ended funds, which most
people are, those get discounted

to $7,500. That's just the fees.
So everybody's paying those

fees. The I do not finance or do
monthly payment plans. It's it's

a one time upfront charge.
Because our time to produce

these is really, you know, is
really quick, I devote a lot of

time to it. And then we get we
get you the paperwork out. So

you're generally getting getting
the paperwork in two weeks. So

financing, it just generally
doesn't work.

Is there software that I use to
keep track of individual

accounts or Ledger's? Yes.

I personally use that folio. App
folio is a good is a good

solution. I recommend it, I get
a I have a discount code with

them. When they pay that
affiliate fee. I pass that

directly on to my whoever,
whoever got it. So I don't keep

any of that affiliate money
myself. And they winds up being

about 10% of the cost. I think
the costs and I know I do not

keep track of what their costs
are. I think it winds up being

about $600 a month though,
because it is a very kind of

industrial grade solution. There
are other projects out there. I

know that some people are using
a product called groundbreaker.

I haven't used them myself, and
but you could check them out.

And so maybe they're they're
very good. I have no idea.

Right?

All right, can I get my friends
to invest in my reg D if I am

advertising? Let's start kind of
at the from a bigger picture, it

might make a little more sense.

Just you to do

oops,

what to delete? There we go.

And go back to the whiteboard.
All right.

So can I read the question?
Okay. So two types of syndicate

syndication generally under 506
under reg D 506, B and 506 seed,

there is also 504 But it is it
is hardly ever used now it's

overly complicated, and so
nearly no one is using it. So

506 B is

C

and we'll go through we'll
answer the question minute but I

just want to outline what those
those differences are.

There so 506 B is yes, you can
have non accredited investors

there's up to 35 per 90 days

506 C, you can have you can
advertise

you can make a general
solicitation.

And so with 506 B though no
advertising

and with 506 C no non accredited
investors. So to answer your

question, what were the problem
is, is if you're doing a 506 B,

you're not allowed to advertise
it really at all. And you said

that you needed to advertise? So
the short answer is probably not

as long as those friends and
family are non accredited

investors, if they, so how do
you do a 506 B, and,

and basically be able to get
people into your fund and find

investors, there's a few ways
what the SEC is main concern is

between 506 B and 506. C, and
why they have this rule setup is

they don't want people just
going out and making general

solicitations to the entire
world of hey, come into this

fund, and basically taking is of
people taking advantage of it.

So people coming up with some
very large mechanisms to, you

know, make, you're gonna make a
billion dollars, if you invest

$5 into this fun, and we're
gonna make all this money and

basically, the syndicator
walking away with it, none of

you are obviously going to be
doing that. But that's what the

SEC is concern is. And so they
use this toggle point between

accredited investors versus
advertising as their mechanism

to regulate that. So non
accredited investors are not

necessarily less sophisticated,
but they have less means to be

able to adapt a very bad thing
happening where somebody walks

away with all the invested
money.

So

the turning point, really, and
it's just read it, this is my

interpretation, reading between
the lines of what the code says

is that it comes down to trust.

They want the investor to be
able to have some relationship,

some sort of, like trust that's
based in something real with the

syndicator. And so what what
needs to happen is dialogue and

communication that is outside of
what the investment is needs to

take place first. So what used
to happen in the very early

days, as syndicators would put
together a seminar, they'd get

everybody packed into a room,
they talk about the investment,

and they get a list of things
and they'd start talking about

what their investment was
immediately and saying, Okay,

come invest, come invest, come
invest in this. It's great, it's

great, it's great. And there was
a lot of the the there was

concerned that there was a lot
of pressure that was being put

on to investors by syndicators
in order to invest.

And so what they have done by
doing this is they've actually

specifically said in the code,
you can't do that. What you can

do, and what this code does,
does not prohibit is putting

together the same seminar, he
put together a seminar of how to

invest in real estate, you never
talk about your investment at

all. And then you basically
invite people to say, hey, if

you'd like to talk some more
about real estate and talk with

me one on one, love to do it,
let's set up a coffee or, or

whatever to do that. So that's
really kind of the main

mechanism that people are doing
in order to build their investor

base is by still setting up
seminars or webinars or things

like that, inviting people into
those communications in those

dialogues, and then going from
there to build that trust and

then doing a 506 B.

I hope that answers that
question.

Next question. What services do
I provide in setting up a closed

end fund? Good question. So we
are basically your back office,

your your support team to get
that fund set up. So what we do

is we put together the PPM the
operating agreement,

subscription agreement, investor
questionnaires, and then put a

package those all together so
that it meets what investors

would be expecting to see from
them. We can do reviews of your

marketing material. We don't do
the marketing material

ourselves, but we do do reviews.
And then you can put it out

there into the marketplace. Once
you've put that all together. We

look at what the offering is.
And then we put together the

form d which is what gets filed
with the SEC

And then we get put together
with the blue sky filings. Now,

a lot of my competitors do
exactly that same thing in terms

of the actual, like, we put this
documents together, what I think

sets us apart and my firm is I'm
an active syndicator. Myself,

I'm putting together my own
deals. And so what, what we try

and do to the the difference
that we make is, I take that

expertise, and I'm available to
you in order to make sure that

ultimately you're successful. I
mean, the reason that we cut our

rate once you're a client of
ours is because our whole goal

here is to have you be
successful. So you keep hiring

me over and over and over.
That's my goal. So generally,

once you're one of my clients,
I'm available to you, we set up

meetings, I see some of my
clients are on this call. And so

they can probably attest to it
as well, that I really do try to

make myself as available as
possible. Probably the easiest

way is to set up a meeting with
me, I try and make it so that I

can meet with people as quickly
as possible. And then we can we

can discuss whatever it is, if
it's about your syndication

specifically, we can talk about
that. Or if it's a question

about, you know, an issue that
you're having, I'm happy to have

those conversations as well.

So that that's what we provide,
in order to set up a closed end.

Another question, is that okay
to have both a 506 b and a 506.

C for the LLC. Great question. I
do get that a lot, too. The

answer is no. So you choose one
and then the and then sometimes

you can go to the other. So
generally, you could if you need

to do raise, do a raise from
friends and family. And to

advertise, what you can do is
you can put together a 506 b

offering, offer that to friends
and family. And then once that's

closed, then you can put
together a 506 C, and then

advertise that specifically,
they need to be two separate

different offerings, though.

So we have we have a fair number
of people that do that, probably

not nowhere near a majority, but
some people definitely do that.

And, and it works, it works
fine, what you cannot do is do a

506 C offering, where you're
advertising it to the world and

then do a 506 b offering just to
pull in those people because at

that point, they've pretty much
seen the offer that's there. And

that may be out there in the
marketplace that you've

advertised. So what we don't
want to ever have happen would

be a complaint gets filed. The
SEC is called in to investigate,

the investor says, Well, I had
no idea who these people were, I

saw an ad on TV, I gave them
money, and I'm definitely not an

accredited investor. That's what
we're trying to prevent. By

making sure that it doesn't go C
then B. But if it goes B then C,

you know, that's fine. You've
brought in all the friends and

family that you know, and then
close that off and then do the

do a 506 C offer.

Right?

So how do I let friends and
family know if I'm doing a 506?

B and can't advertise? Great
question. The the you can't

advertise in terms of a general
solicitation under 506 B. But

you can't let certainly let
friends and family know I think

you probably could even post on
Facebook or on whatever your

social media is,

hey, here's what I'm working on.
And you could bring people in

that way. But you'd have if you
decide to do that, you just

wouldn't be very diligent that
the only people that you're

letting into that investment are
people you actually know. So I

wouldn't go like trying to test
the gray area when you're

putting together seminars and
getting to know them for a week

and then talking to them about
the investment and do that

mechanism. But otherwise, you
could certainly say put it out

there to the world, hey, I'm
doing this. You know, if you're

one of my buddies, give me a
call. And that should be okay

because it's not then a general
solicitation where anybody can

come in.

Who is an accredited investor,
an accredited investor as

defined in rule 501. What it
basically says is there's two

tests, there's an income test or
there is a a net

net wealth test. You do not need
to pass both of them in order to

be considered an accredited
investor you only need to be

I passed one of them. For the
net income test it needs to be

if it's a person applying on
their own. So without their

spouse that they need to have
$200,000 a year in income for

the past two years and
expectation of get that for the

third year. And for the net
wealth test, it needs to be net

wealth of, Oh, I'm sorry. And
for the income test, if it's

with a spouse, it's $300,000.

Or,

plus $300,000. A year for the
last two years with the

expectation of the current year
being $300,000 a year, the

wealth test is for a net wealth
of $1 million. And that's not

counting any positive equity for
fant primary residence. So if a

house is underwater, that does
bring down that personal net

worth. But if your house is
worth worth a million, and you

owe, you know, $5 on it, you
don't get to count that

additional income as that
primary that that big spread

that $995,000. So you don't need
to get to count that as your as

your wealth that needs to be
separate from that primary.

Key.

Can we do a 1031? Exchange?
Common question the answers?

The simple answer is no.

The we'll have a backup this
simple. If you mean to, can we

do a can people 1031 Exchange
into a property into your

property and give you the the
money from there? The answer is

probably no, that money itself
would be counted as boot and

they're going to be paying their
taxes on it. Outside of that

1031 Exchange. If they want to
pay taxes on it, then absolutely

they can. But it is counted as
boot. And he can't come in.

The only exception to that. And
I'm hesitant to say it is in the

case of a Delaware statutory
Trust, which is a very

competent, complicated
mechanism.

And it's so technically they you
can set up a fund in order to

raise money with 1031 money. But
it can only be in the in the

specific shell of a Delaware
statutory Trust, which are very,

very complicated, expensive and
very challenging to put

together.

In You 1031 out probably now
here it gets kind of state

specific, because a lot of times
what happens is the IRS under

the IRS rules. It's 98% Not a
problem.

Under local state rules, it
depends. So in California, for

example, if you were to try and
do a 1031 exchange out of a

property that's being
syndicated, and one of your

investors doesn't want to go
along, but everybody else does.

The Franchise Tax Board and
California will come after you

and disallow it and they don't
have any problems filing a

lawsuit against you, no matter
what, despite whatever the IRS

rulings are, they want their
money immediately. So they will

disallow it. I've heard New York
is also equally challenging. I'm

not keeping track of which
states like it and which don't.

Now, if everybody wants to 1031
Exchange, that's not going to be

a problem. So you certainly can
turn 31 out, as long as every

investor doesn't have a problem
with it. Or if your fund is just

set up automatically to do that,
then it will be okay. But

everybody has to come along, you
can't spread out split out

fractional shares in some
states. So I'd be very careful

about that.

We have some clients who are
doing it very successfully. But

they're also not letting in
people from New York or

California in order to be able
to do it without a problem.

Which is easier an open ended
fund or a closed ended fund.

So and

well, it depends what you mean
by easier, so easier in terms of

raising capital. I think most of
the time, it is much easier to

raise money for a closed ended
fund. In my experience, most

investors like to have concrete
start dates. An expectation of

this money is going to be held
and doing whatever it's doing

for five years, seven years,
three years, whatever that time

period is and they kind of know
what that is going in.

So raising money

My experience is closed ended as
much easier open ended is more

vague. And the more vague it is,
the more challenging it is.

The what's easier about open
ended funds is open ended funds

are easier in terms of strategic
decisions. If you've got a pool

of money and you're able to
place it an open ended fund,

you're able to do that. You just
need to make sure you're

complying with whatever rules
are in your operating agreement

that are set up. So the specific
plan of an open ended fund can

be easier. But a closed ended
fund is much easier to get

investors for and much easier to
maintain. Because we're not

dealing with like what we
answered before about funds

where we're have to having to
keep track of either separate

Ledger's or keep track of

of net asset value along the way
that gets gets overly

complicated.

How, what's up above?

does? Does documentation for
five accepting investments from

self directed IRAs?

Yeah, basically, almost every
syndicator does allow accepting

funds from self directed IRAs,
to backup just so everybody

knows a self directed IRA is
basically it's an IRA, where the

administrator of that IRA allows
the LAOs the person with that

account the account holder to
basically dictate where their

funds are going to go. And that
can be into a syndication. So

there's quite a few companies
that are self directed IRA

companies, probably the biggest
is and trust en TR ust, but

they're by far not the only
ones, I've dealt with probably

about six different ones.

And they're generally pretty
easy. So it I haven't had a

situation where I've had a, an
administrator of a self directed

IRA, ask for any changes to a,
to a ppm or to an operating

agreement, their main concern in
order because they want to stay

compliant for the benefit of the
IRA holder, is that the IRA

holder doesn't have access to
touch the money themselves. So

it's, it's nearly impossible to
set up a self directed IRA,

where the syndicator themselves
gets to go into the investment.

But it's almost always the case
that, that you can generally

have investors who have self
directed IRAs. And you should

and that's a great talking point
to, to finding investors to

having those conversations,
because now they can put their

IRA money as to use in your
syndications as well, it's a

good thing to talk about. And
the only administrative thing

that that burden that it adds to
you is two things is first, you

have to submit it to the
administrator for their review

before you can get the money.
And the second thing is every

year, the administrator is going
to ask what really they're going

to ask the IRA holder, who then
will ask you is they want to get

a general assessment of what the
current value of that IRA is, or

what that acid is in their IRA,
for reporting purposes, they

need it. So they will ask for
it. But it's really it's not

that big of a deal. You know, I
basically have a template for

it.

If ever you're working on one
and you're a client of mine, you

just tell me that, you know, how
does this work? And I'll send

you over what my template is,
and you can fill it out and it's

it's pretty simple.

Let's get a quick drink.

All right.

Another question. We have some
situations where after signing

the ppm or wanting to provide a
discount on our fee and

commissions,

what tax formality or
documentation do we need to

have? Okay, yeah, you you
absolutely can do that.

This is where most of the time
we'll talk about side letters.

So, and we'll talk we talked
about side letters and our PPM

and I think we talked about a
little bit in the operating

agreement, just that these
things exist. What a side letter

basically is, is it's an
agreement outside of what your

normal investors get. So it's,
let's do a diagram. Easier.

Oops.

Same thing.

So you've got your agreement

with your investors, right? So
investor, investor. And then

you've got this guy here,

who's also an investor. And you
want to give him a little bit

better deal, say, you've got it
on that, that this investment is

paying, and I'm making stuff up
here, it's paying an 8%

preferred return, and then a
7030 split.

So 70%, to the investor and a
30%, to the manager, this guy is

coming in with a lot of money,
this guy here.

And you really want him as an
investor, and you want to incent

him in order to finish off your
investment and bring him in.

So what you want to offer him is
an 8%. Breath

and an 8020 split.

So that is no problem at all.
What you'd basically do is have

him sign the fee agreement, and
then do this separate side

letter

just for him, that says, okay,
and for you, we're going to do

an ad 20.

So that's one way to do it.

What the caution is that, that
we're looking at whenever we're

doing side letters, is I don't
want there to be a situation

where,

where instead of this 8% pref,

you are suddenly doing a 12%
prep, and you've told your

investors that word that this is
an 8% Prep. Now why is that the

case, because all these are
getting the 8%,

the 8%.

And then after that are getting
that 7030 split. So after all

that money's paid out, then
they're getting a 7030 split

well, that 8%

is driving down the amount of
available

cash for distribution.

Right, because they're getting
that right off the top. So now

if I'm giving somebody this 12%
right off the top, that striping

them more than the investors are
expecting, and so you're

diluting them without telling
them and so that's that's a big

nono.

So I don't want whenever we're
talking about,

about those, that's what I'm on
the lookout for is dilutions

that are unintended. In terms of
fees, what you can do is,

because I think that was your
question

is Can you can you give them
some fees? The answer is, yeah,

you can give them some fees. And
sometimes we'll do those,

especially in the case of like a
kicker for a guarantor on a

loan. Like if somebody is
investing a large amount on

there, you'll give them maybe 1%
of the of the amount financed

just for the act of signing on
the loan. That's okay to do.

In terms of, of what there is
now, in terms of tax formality,

but so though, the documentation
is simple, it's a side letter,

it's the agreement between the
fund and the investor. That's

the documentation you need. For
a as it relates to taxes, what

will happen is you'll need to
just basically explain what it

is what the situation is to your
tax preparer, your CPA, when

they're preparing the K ones to
make sure that they get

notified. Now, if they're
getting paid a portion of fees.

That's basically BS coming from
the manager is how you would

want to structure it, not from
the fund itself. So it's the

manager paying the fees. So a
fee gets paid to the investor to

the manager, and the manager
then kicks that back to the fee.

So let's just

just make sure it's real clear
because could be a problem

otherwise.

So

here's your inbox.

stir. So it's paying regular
distributions. And this is the

investment.

Hopefully you all can see my
handwriting, I think it makes it

helpful to see it this way
though.

So you have the sponsor LLC,
getting paid fees,

and then the sponsor LLC paying
some subset of fees.

So it's going to reduce the
amount of taxes that the sponsor

LLC pays. And then the what this
investor is going to basically

get a k one.

They'll get a k one on that
distribution, and they'll get a

1099 on the subset of B's.

So from a tax perspective,
that's the that's what would

happen.

In a real estate fund, could an
investor invest funds into a

property's equity through a no
between the fund LLC and the

sponsor?

Sorry, let me switch. Could an
investor invest funds into this

property's equity?

Through a no? Yes, you could.

Yeah, you could do that. You
just would want to, again, make

sure that the investors are
still getting what, what they're

expecting, who are not a party
to that specific investor? And

then document that that
investment through the note. So

you would document the No,

don't? Yes, is the short answer.

There is no difference in the
document preparation, if the

syndication invest in
residential or commercial

property.

Not a substantial difference in
me know, in your private

placement memorandum, there's
there's documentation about

different risk levels, there's
documentation about what your

overall strategy is. So those
things are going to be

different. In what those docket
what all of those syndication

documents look like, but the
state of those documents or you

know, there's, there's not
anything that's

substantially different, like,
oh, well, if it's residential

property, you need to put all of
this stuff, except for risks or

whatever is going on with that
particular investment.

Is there any minimum or maximum
amount of money that can be

raised? No. So under Regulation
D, you could raise $1, you could

raise $20 trillion?

You'll, you know, if you can, if
you can raise $20 trillion, I've

got a job for you.

If you

but there is there are no
maximums, under Regulation D and

no minimums, either. It's
probably not economically viable

to to do a minimum raise to do a
raise, typically. I mean, when I

was coaching people, when people
would ask what the minimum would

be, that I would look at, I
probably would say a minimum of

a million dollars of equity
raised, it's

the amount of money that you're
making at less than a million

dollars is probably lower than
would make it make sense for the

amount of work that you do as a
syndicator.

Alright, so we got just one
question left, how does form D

work?

Form D is basically the
notification to the SEC. So

Regulation D has, is basically
an exception to the general

security rule that all
securities must be registered.

That's the key word is
registered with the SEC. As an

exception to it, it doesn't need
to be registered, but it does

need to be some documentation
needs to be filed. And that's

through the form d.

What the rule is, is generally
the the SEC once the once that

form D filed within 15 days of
the first sale of of the

security, but it further defines
that the sale the first day of

the sale of the security is the
date, basically at which point

the investor isn't going to get
their money back.

So if you get it up

You know, you've raised all this
money, you get it to the finish

line, it's just not going to
happen, that property is not

going to transact, you give them
their money back, no form deeds

owed. It's just not a relevant
piece of paper anymore to being

filed. You still could file it
if you want. But you know, they

you've already given the money
back. So you don't have a filing

date, really until, until
there's no time to get it back.

Now, if you miss that time
period, it's very far from the

end of the world. The SEC does
not have a penalty. There's no

fee and filing the form d,
there's no penalty associated

with the SEC on late files.
Occasionally, some of the blue

sky states have a late fee
filing. But they also don't have

I don't know of any state that
has a a, you know, a prohibition

of, you know, you won't get this
protection under form D because

are under reg D because that
would be outside of their

jurisdiction anyway.

Because as a matter, the federal
rule wins. Regulation D says,

Well, yeah, you need to file it
within 15 days. Probably you

need to have it filed to be
protected by Regulation D in

case of a lawsuit. But there's
never been an opinion. There's

been one opinion letter that
opined that it was possible.

But in that one particular
opinion letter, it said in this

case, it doesn't. It doesn't
change the standing that

Regulation D still applies, even
though the form d wasn't filed.

So that is the answer to that
question. Okay. So we hit the

amount of time that we've got
allocated for this. So I hope

that was helpful. Again, if
you're ready to move forward on

putting a syndication together,
if you've identified properties,

or you're ready to get started
right away, give us a call and

we will get you going we'll get
set up a time to talk. But

otherwise, feel free to you
know, we'll be putting these

webinars together fairly
regularly or I'm sure you're

getting our email blasts, and I
hope you find those useful. Feel

free to check in as if you're
not a client. I will try to make

time to answer answer the
questions. If you are a client.

I will definitely find time to
answer any questions. So I hope

you found that helpful. Thanks
and have a great day.