April 16, 2008

Real Estate Syndication Questions & Answers: Part 9

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As we prepare for our seminar program that covers the concepts of successful syndication, many people are sending in questions that they have about the topic. We are organizing them into categories and I am answering them so that everyone who is interested in learning how to make money the same way that Wall Street makes money, can begin to understand how the business works.

In the coming weeks, I will continue to answer the real estate questions that come in using our weekly column. Feel free to submit your own questions as well. To register for our upcoming live event, go to www.SyndicateFast.com. To submit a question of your own, go to www.joelblock.com/capital.

More Questions about Real Estate Syndication

How many people are required to make a syndication? Two or more people are all that is required to create a syndication. If you sell a security, which is an investment, where the investor relies on the efforts of someone else, then you are in a situation where you are syndicated. So, be careful and heed all of the advice that is being provided to you here.
Is there a proper format for a PPM? No. There is no prescribed formula for a PPM. However, a private placement memorandum can be a powerful insurance policy against lawsuits.
Who is the private placement memorandum actually for? Contrary to popular belief, the private placement memorandum, although given to the investor, is designed to protect the syndicator, not the investors. The investors are given the opportunity to ask all the questions they might have, to review the materials carefully, and to have full and fair disclosures made clear in the private placement memorandum. But, in the event of a lawsuit, the private placement memorandum is designed to protect the syndicator, because there can never be a promise of success, just the promise of doing your best.
Can you write a PPM after the fact if you didn't do one beforehand? Incredibly, you can write a PPM after the fact, even if you've been operating without one for an extended period of time. However, you have to offer the investors the right to rescind their interest in the deal and receive a full refund if you're going to introduce aspects of the deal that weren't present when they originally got in. As long as you offer the right of rescission, you can offer them new terms and ask them to sign the deal; and when they do, then you're in a position to start your deal fresh with a brand new PPM.
What kinds of properties are good for syndication? The amazing thing about real estate syndication is that it's not limited to real estate. Any kind of asset where money needs to be pooled is appropriate for syndication. That means real estate of all kinds, including land, buildings, commercial properties, residential properties, etc., can be syndicated. However, so can films, airplanes, yachts, industrial plants and other types of equipment where capital needs to be pooled for the purpose of acquiring these assets. What's important to understand, however, is that it costs money to create a syndication, and, therefore, it depends on the size of the asset that's being acquired. Syndication doesn't work if you're raising too little money.

All this material and a lot more will be addressed at our live seminar in May called “How to Raise Money for Real Estate: Harnessing the Power of Syndication.” If you are a real estate professional or someone who is involved on the capital side either as an investor or facilitator, then this incredible two-day event is for you. For more information, go to: www.syndicatefast.com.

Real Estate Syndication Tele-Seminars!

Join Joel Block and his Expert Syndication Instructors www.syndicatefast.com

About Joel G. Block

Well known in the business community, Joel Block is a best selling author, speaker, and business strategist. Frequently a principal in his transactions, Joel has raised tens of millions of equity dollars for his ventures, which have included real estate syndications and privately held businesses.

Joel’s career is highlighted by the launch of a financial publishing company which he grew nationwide and later sold to the Los Angeles Times. More recently, Joel works with scientists, engineers, technologists and others to help them optimize their entrepreneurial opportunities. Would you like to get a private phone consultation with Joel? Visit www.joelblock.com/capital for details.

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