A syndication is when a group of investors pools their money together to invest in a specific, identified deal — such as a multifamily property, commercial building, self-storage facility, or business acquisition. With a syndication, investors know exactly what asset their money is going toward before they commit.

The key difference is whether the asset has been identified. In a syndication, the deal is already known — investors are putting money into a specific project. In a fund, capital is raised before deals are identified, meaning investors are betting on the operator's ability to find and execute good deals over time. Syndications are typically deal-by-deal; funds are built for ongoing, repeated acquisitions.

We’re obviously biased, but Yes! When you raise money from multiple investors for a real estate deal or business acquisition, you are likely selling a security under federal law. Failing to comply with securities regulations can expose you to serious legal liability. Securities, like many other areas of the law, are complex and nuanced. The steps that someone else took for their deal might not be the steps necessary for you to be compliant for your deal. The steps you took in a past deal might not meet the requirements for a new deal. An attorney like Polymath Legal helps you select the right exemption, draft the required documents, cut through the nuance, and stay compliant from day one.

Absolutely not. Part of the complexity of navigating securities regulations is understanding the various acts and when they become applicable. In addition to the Securities Act of 1933, the Securities Exchange Act of 1934, an issuer may also need to comply with the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Employee Retirement Income Security Act of 1974, various state securities, and other laws and regulations.

Regulation D is the most commonly used securities exemption for private offerings. It allows you to raise capital quickly—if you work with Polymath Legal, it often can be set up in as little as two weeks, but it typically takes about three to six weeks. You can raise an unlimited amount of capital from an unlimited number of investors. Depending on the specific sub-rule used (506(b) or 506(c)), you may also have the ability to publicly advertise your offering.

Under 506(b), you cannot publicly advertise your offering, but you can accept both accredited and a limited number of sophisticated investors, so long as you have a pre-existing, substantial relationship with all of your investors. Under 506(c), you are allowed to advertise and market your offering broadly to accredited investors, but all investors must be accredited investors, and their accredited status typically must be verified by a third party. The right choice depends on your investor base and how you plan to raise.

There is no statutory definition, nor is there specific, enumerated guidance from the SEC. Generally, a relationship is pre-existing if it was established before your deal and offering was available. The substantial part of this relationship includes knowing whether they are sophisticated or accredited and the reasons why. You should understand items like their current and past investments, investment experience, income, education, work experience, financial acumen, and other items.

Reg A and Reg CF both allow you to raise funds from non-accredited investors and to advertise publicly, which are advantages. However, they come with significantly more time and cost. Reg CF requires you to host your offering on an SEC-approved portal that typically charges upfront fees plus a percentage of your raise. Reg A is often called a "mini-IPO" and can take six months or more to launch. For most real estate syndicators, Reg D is faster, more flexible, and more cost-effective.

There are many exemptions. As mentioned, Regulation D is the most common. Regulation A and Regulation CF are two exemptions that came from the Jobs Act of 2014. Regulation S is an exemption used for offshore offerings and investors. Section 4(a)(2) is the original statutory private placement exemption. Most states have state-law-based securities exemptions that allow you to raise funds from investors in that given state—these are called intrastate offerings. There are additional, more nuanced exemptions that only work for very specific structures, such as short-term promissory notes and loans secured by real estate. Polymath Legal can assist you in identifying which exemptions you may qualify for, and can ultimately help you determine which exemption will help you best meet your goals.

A standard syndication typically requires a Private Placement Memorandum (PPM), an Operating Agreement, a Subscription Agreement, and SEC filings and other documents or filings, depending on the specifics of your deal and offering. Polymath Legal handles drafting and reviewing all of these for clients.

It depends on the structure and the nature of the investment. If your friends and family are passive investors expecting a return, you may still be selling a security, which means you need to comply with an exemption regardless of your personal relationship with them. Don't assume familiarity exempts you from securities law.

If you're doing deals with your own money, probably not. But if you're bringing in outside investors — even just a few — you likely need to structure the deal properly under securities law. This is true for house flips, business acquisitions, and commercial deals alike. The number of investors isn't the deciding factor; the structure of the investment is. Many of our flipping clients that need capital for short-term projects reach out to us for assistance in setting up debt funds.

Polymath Legal only has permission to practice in the states of California and Washington and does not hold itself out to practice in other states, nor does it have offices outside of those states. However, depending on your deal and offering, it is likely that you will be using a federal exemption. Polymath Legal has helped clients all across the country comply with federal securities laws. Because these are federal exemptions, these federal requirements remain the same regardless of what state you are raising in or from.

The first step is to schedule a free 15-minute Discovery Call. From there, we'll assess your situation and recommend the right path forward — whether that's a Paid Strategy Session to discuss your structure or moving directly into document drafting. Reach out at (833) 931-6418 or visit polymathlegal.com. For many of our securities law services, we have flat-rate packages. You’ll choose your package, sign your agreement, submit your payment, fill out a questionnaire, and then we get to work on ensuring your securities offering is compliant with regulations.