Real estate syndication is the process of forming a group of investors who pool their resources to invest in real estate opportunities. By combining funds, investors can participate in deals they might not be able to afford individually. In a typical syndication, there are two main roles: the syndicator (or sponsor) who manages the investment, and the passive investors who provide the capital.

While these terms are often used interchangeably, they have distinct meanings. Real estate syndication is the process of forming an alliance of investors to invest in real estate opportunities. Crowdfunding, on the other hand, is a method of finding investors willing to syndicate through specialized channels, often online platforms.

We may be a bit biased, but in our view the answer is a resounding “Yes”. Real estate syndications involve numerous legal and regulatory issues that require expert guidance. Trowbridge Nieh LLP will help ensure your offering complies with securities laws, draft necessary documentation, structure the syndication properly, maximize tax benefits, file correct documentation, and ensure the smooth operation of your real estate syndication. Here’s a video in which syndication and crowdfunding attorney Jon Nieh, Esq. explains why you should never draft your own docs.

There are various ways a syndicator can earn compensation for managing an investment offering. Here are a few:

• Acquisition fee: A one-time fee for finding a deal and structuring the syndication
• Asset management fee: A continuous fee for operating and managing the property
• Refinance fee: Compensation for work required to refinance the property
• Loan guaranty fee: A fee when the syndicator uses a high-net-worth individual to sign the loan
• Disposition fee: A one-time fee for selling the property
• Construction management fee: May apply if the syndication participates in property renovation

However, be careful about receiving compensation for the sale of securities as an unregistered broker-dealer. This could get you in big trouble if you don’t maintain legal compliance.

Syndication waterfalls are financial structures that describe how investment returns are distributed. These typically involve preferred returns, in which there are at minimum two classes of investors, Class A and Class B. The Class A investor receives a priority percentage rate return on investment before the Class B investor receives a return on investment.

To raise capital for real estate syndication:

• Specialize in one sector that aligns with your goals
• Create a detailed business plan highlighting a property’s potential
• Connect with investors while following SEC regulations.
• Establish suitability standards that align investor profiles with the specific investment objectives of the offering. This is important because it ensures cohesion among your investors, increases overall ease of management, and reduces the risk of litigation.
• Create a Private Placement Memorandum (PPM) that covers all details of your proposal

Trowbridge Nieh LLP offers comprehensive flat-fee packages that include all the legal documentation and guidance you need to successfully raise capital.

Investors typically consider:

• Qualifications: Whether the syndication requires accredited or sophisticated investor status
• Track record: The sponsor’s experience and history of success
• Preferred returns: How returns are structured
• Tax benefits: How the syndication minimizes taxable income
• Sponsor fees: The compensation structure for syndication sponsors

Absolutely! While real estate is a common syndication vehicle, Trowbridge Nieh LLP helps clients form syndications for many types of businesses, including:

• Startup Companies: Raising capital for new business ventures through private placement offerings
• Sports Franchises: Funding professional teams like hockey clubs and other athletic organizations
• Triple Net Properties: Investment in stable, long-term leased assets such as dollar stores and other retail establishments
• Agricultural Ventures: Olive groves and other agricultural operations with steady production cycles
• Specialty Manufacturing: Craft production facilities like distilleries and brewing operations
• Recreational Properties: RV parks and tourism-related hospitality ventures
• Residential Income Properties: Mobile home parks and multi-family residential complexes
• Self-Storage Facilities: Climate-controlled and standard storage unit developments
• Film & Entertainment Projects: Funding movie production, music ventures, and entertainment projects
• Energy Ventures: Oil and gas investments, renewable energy projects, and related ventures
• Technology Companies: Software development, technology product launches, and IP-based businesses
• Healthcare Ventures: Medical practices, pharmaceutical development, and healthcare innovation
• Hospitality Businesses: Restaurants, hotels, and tourism-related ventures
• Manufacturing Operations: Production facilities, equipment acquisition, and operational expansion
• Private Equity Funds: Multi-project investment funds across various industries

The same legal principles apply regardless of industry, though specific structuring may vary based on the business model, projected returns, and investor profile. Truly any venture can be funded via syndication. In syndication and crowdfunding, the only limit is the deal sponsor’s imagination.

Syndicating a business offers several advantages:

• Retain greater control compared to venture capital or angel investor arrangements
• Structure terms that align with your business goals rather than institutional requirements
• Potentially lower cost of capital compared to traditional loans
• Access to investor networks beyond traditional lending sources
• Ability to combine debt and equity in creative structures
• Create a community of investors who may provide additional value beyond capital

Trowbridge Nieh LLP can help determine if syndication is the right approach for your specific business needs with our free consultation.

A Form D is the required notice to be filed with the Securities and Exchange Commission for exempt securities offerings. Per Rule 503, issuers who sell unregistered securities under exemptions provided by Rule 504 or Rule 506 of Regulation D, or Section 4(a)(5) of the Securities Act of 1933 must submit this form. The purpose of the Form D is for data collecting purposes so the SEC can analyze the condition of the private placement market.

The filing deadline is 15 calendar days following the first sale, defined as when an initial investor becomes irrevocably committed to invest. Should this deadline fall on a weekend or holiday, it extends to the next business day. The SEC accepts Form D filings and amendments without imposing any filing fees.

Trowbridge Nieh LLP’s offering package includes Form D filings. You just need to alert us when you “break impounds“, which is typically the point at which investor funds become irrevocably committed to invest.

If an issuer fails to timely file a Form D, they may face fines from the SEC. Further, Rule 507 provides that an issuer may not use Regulation D in subsequent offerings if it is subject to an order, judgement, or decree by any court enjoining it from violating Rule 503. Failing to timely file a Form D may result in reputational harm and preclusion of future exempt offerings under Regulation D.

The SEC does not charge a filing fee for Form D. However, each state has separate filing charges, ranging anywhere from $50-$1200 per filing. Trowbridge Nieh LLP’s flat-fee packages include preparation and filing of Form D with the SEC and required state notices, but the actual government filing fees are charged separately and are not included in our flat fee.

Form D notices and amendments require electronic submission through the SEC’s EDGAR system (Electronic Gathering, Analysis, and Retrieval). To access this online filing platform, issuers must obtain a unique Central Index Key (CIK) number and corresponding access codes. These credentials can be secured at any time prior to your initial filing requirement by completing the online Form ID application for EDGAR access. Companies and funds should proactively establish these credentials well before their first Form D submission deadline.

Securities exemptions are regulatory allowances that permit certain securities offerings to avoid full registration requirements with the SEC. The most common exemptions include:

Regulation D exemptions (like Rule 506(b) and 506(c)) for private placements to accredited investors, Regulation A+ for smaller public offerings up to $75 million, and Regulation Crowdfunding for raising capital through crowdfunding platforms.

Each exemption has specific requirements regarding investor qualifications, disclosure obligations, offering size limits, and resale restrictions. These exemptions make capital raising more accessible for smaller businesses while maintaining investor protections appropriate to the scale and nature of the offering. Trowbridge Nieh LLP can assist you in choosing the best securities exemption for your offering.

That largely depends on the size and scope of your company. Typically, for small and mid-sized businesses, public offerings are prohibitively burdensome. Going public through a traditional IPO is significantly more complex and expensive than using securities exemptions. Here’s why many companies choose exemptions instead:

• Cost – IPOs typically cost $1-2 million+ in legal, accounting, and underwriting fees, while exempt offerings can cost a fraction of that.
• Time – The IPO process often takes 6-12 months, whereas some exempt offerings can be completed in weeks.
• Ongoing compliance – Public companies face extensive quarterly and annual reporting requirements, Sarbanes-Oxley compliance, and SEC oversight that can cost millions annually.
• Market pressures – Public companies face constant scrutiny from shareholders, analysts, and the market, often creating short-term performance pressure.
• Disclosure requirements – Public companies must disclose competitive information that private companies can keep confidential.

For many small to mid-sized businesses, the burdens of going public simply outweigh the benefits until they reach a certain scale.

Regulation D provides exemptions from SEC registration requirements, allowing certain companies to offer and sell securities without full registration. The most common exemptions are Rules 506(b) and 506(c).

Rule 506(b) allows raising unlimited capital from an unlimited number of accredited investors and up to 35 sophisticated non-accredited investors. General solicitation and advertising are prohibited.

Rule 506(c) allows raising unlimited capital through general solicitation and advertising, but all investors must be accredited, and the issuer must take steps to verify accreditation status.

Regulation A is a securities exemption allowing companies to raise up to $20 million (Tier 1) or $75 million (Tier 2) from both accredited and non-accredited investors. It enables public advertising with streamlined disclosure requirements compared to IPOs. Tier 2 offerings provide freely tradable shares with semi-annual reporting, while Tier 1 has fewer requirements but needs state approval. Often called a “mini-IPO,” it balances capital access with reduced regulatory burden.

Regulation Crowdfunding enables companies to raise up to $5 million annually from both accredited and non-accredited investors through registered online platforms, such as wefunder, startengine, and republic. It requires simplified disclosures via Form C, imposes investment limits for non-accredited investors based on income/net worth, and mandates annual reporting post-raise. Securities become freely transferable after a one-year holding period. This exemption democratizes investment opportunities while giving small businesses access to capital from retail investors previously excluded from private offerings.

Per the SEC, an “accredited investor” is:

• a bank, savings and loan association, insurance company, registered investment company, business development company, or small business investment company or rural business investment company
• an SEC-registered broker-dealer, SEC- or state-registered investment adviser, or exempt reporting adviser
• a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5 million
• an employee benefit plan (within the meaning of the Employee Retirement Income Security Act) if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million
• a tax exempt charitable organization, corporation, limited liability corporation, or partnership with assets in excess of $5 million
• a director, executive officer, or general partner of the company selling the securities, or any director, executive officer, or general partner of a general partner of that company
• an enterprise in which all the equity owners are accredited investors
• an individual with a net worth or joint net worth with a spouse or spousal equivalent of at least $1 million, not including the value of his or her primary residence
• an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year or
• a trust with assets exceeding $5 million, not formed only to acquire the securities offered, and whose purchases are directed by a person who meets the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment
• an entity of a type not otherwise qualifying as accredited that own investments in excess of $5 million
• an individual holding in good standing any of the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82)
• a knowledgeable employee, as defined in rule 3c-5(a)(4) under the Investment Company Act, of the issuer of securities where that issuer is a 3(c)(1) or 3(c)(7) private fund or
• a family office and its family clients if the family office has assets under management in excess of $5 million and whose prospective investments are directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment

Crowdfunding is a method of raising capital through an online platform to gather investments from multiple individuals. For securities, this is regulated under SEC rules, particularly Regulation Crowdfunding.

See “What is Regulation Crowdfunding?” above for a more detailed explanation.

Eligible issuers can offer and sell securities through platforms operated by registered broker-dealers or funding portals (wefunder, startengine, republic.co, etc.) that are both SEC-registered and FINRA members.

Prior to filing Form C offering statements, issuers (but not intermediaries) may communicate to gauge interest in a potential offering, subject to specific conditions and disclosures.

As Gene Trowbridge often puts it, the private placement memorandum is “The Story of Your Deal.” A PPM is a legal document provided to prospective investors when selling securities. It contains detailed information about the offering, company structure, risk factors, use of proceeds, and legal/tax matters. It serves both as a disclosure document and a marketing tool.

Trowbridge Nieh LLP can assist you in drafting a PPM that entices potential investors while maintaining legal compliance.

While you can form entities yourself, it’s advisable to work with a competent legal team, such as Trowbridge Nieh LLP, to ensure proper structuring. Typically, real estate syndications involve creating at least two entities: one for the property ownership (Investment LLC) and one for the management team (Management LLC). Legally forming the entities requires filing a Certificate of Formation or Articles of Organization (depending on state) with the Secretary of State.

A complete securities offering package typically includes:

• Private Placement Memorandum (PPM)
• Operating Agreement for the investment entity
• Subscription Agreement for investors
• Investor Questionnaire to determine investor suitability and, where applicable, accredited investor status.
• Form D and other regulatory filings, including state securities notices

Trowbridge Nieh LLP provides all these documents in our flat-fee packages.

Our services include:

• Deal structuring consultation to determine the appropriate securities exemption and best legal framework for your deal
• Entity formation for investment and management companies
• Drafting offering documents (PPM, Operating Agreement(s), and Subscription Agreement)
• SEC and state securities filings
• Ongoing compliance guidance
• Investor onboarding support
• Marketing materials review for legal compliance

Our transparent flat-fee securities offering packages include:

• Initial structuring consultation
• Formation of legal entities
• Drafting of all disclosure documents and investor agreements
• SEC filings and state securities notices
• Review of marketing materials
• Continuing legal support for six months after your offering is complete

Please note that government filing fees (SEC and state securities agencies) are not included in our flat fee and are charged separately. These filing fees vary by state and typically range from $50-$1,000 per state filing.

We do not charge hourly rates or add unexpected legal fees during the process. The legal fee quoted at the beginning is the price you pay, with no surprises.

The time to complete a securites offering package may vary depending on several factors. Generally, with Trowbridge Nieh LLP’s efficient process:

• Regulation D offering documents: As little as 3 weeks
• Regulation A+ offerings: Approximately 6 months for regulatory approval

The Trowbridge Nieh LLP securities offering process entails several key steps to ensure a smooth and satisfactory client experience.

• Initial Consultation and Legal Framework: The first step is to conduct what we refer to as the “homework call” in which the attorney discusses with the client their specific goals, determines the appropriate exemption, and provides an explanation of the legal framework the offering will use.
• Entity Formation and Regulatory Compliance: Our legal support staff will get to work forming the required entities and, if required, appointing a registered agent. The client will need to obtain a tax id number (EIN) for the newly formed entities.
• Document Preparation and Investor Engagement: Your attorney will get to work diligently creating the critical documents required for your offering including the private placement memorandum (PPM), the operating agreement, and the subscription agreement.
• State Compliance and Final Steps: Once the sponsor breaks impounds (investor funds become irrevocably committed), the sponsor must provide notice to the SEC, via a Form D, and to all the states in which investors reside. Our support staff will ensure all the notices are properly filed.
• Ongoing Legal Support: For 6-months after the offering has been drafted, we will provide you with guidance and support at no additional costs.

You can learn more about our offering process here.