A real estate syndication is a securities offering where the general and limited partners own shares of the entity purchasing a property. The SEC recognizes that putting every syndication through the IPO process would be too administratively burdensome. So, they created two exemptions syndicators can use to forego the expensive IPO process.
The 506(b) exemption is the most commonly used. General criteria are outlined below:
- Open to 35 non-accredited investors and an unlimited number of accredited investors
- A pre-existing relationship is required
- Not allowed to advertise opportunities publicly
- 3rd party verification is not required
The other exemption is 506(c), which we utilize to steer clear of any grey area with the SEC. General criteria are outlined below:
- Open to an unlimited number of accredited investors
- Pre-existing relationships are not required
- Allowed to publicly advertise opportunities
- 3rd-party verification is required (done through our portal, we pay the fee for you)