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Published:November 3rd, 2010 18:11 EST
Real Estate Syndication: Will You Give Us the Forms?

Real Estate Syndication: Will You Give Us the Forms?

By Joel G. Block (Mentor/Columnist)

I`m regularly asked by people who get involved in our real estate syndication and capital raising program if they can simply get the forms and fill out the securities documentation on their own. I am very quick to point out this is a terrible idea and for that reason, we do not provide forms for our attendees to fill out by themselves. Some people may think I`m holding information back or that I just want the people to pay more fees for the attorney`s benefit, but this is not so at all. There are several critical reasons why we don`t give out forms.

First, the purpose of the private placement is not for the benefit of the investor. The private placement materials provide disclosure and deal documentation that benefits the promoter. It`s true the promoter has to advance the fees to the attorney in order to do the work, but after the deal is funded, the promoter is reimbursed for all of the expenses he or she lays out in preparation of doing the deal. Since the private placement process protects the promoter, and because the deal reimburses the costs of all of that legal work, it`s like getting an insurance policy for free. So I ask, Why would you ever take a shortcut when you are the one that benefits from the legal work? "

Beyond that, there are several critical reasons why a promoter should never try to write the private placement without the guidance of an experienced and competent attorney. First, every deal is different, and for that reason it requires the advisement of knowledgeable counsel. There are several questions and issues that will inevitably come up " the answers to which will not be found in any forms that you might find along the way. Making a mistake could cause tremendous problems for the promoter in the future.

The second reason is that once these documents are prepared and given out to the investors, a smart investor -- particularly one that makes larger investments, will pass these documents to their attorney for review. The attorney may not have an opinion about the deal, but that same attorney will certainly have an opinion about the documentation that you have prepared. If the attorney reviews the document and sees that they were done by a Bozo, that attorney might tell the investor he or she can`t draw a conclusion about the quality of the investment. But that same attorney will be able to tell the investor that the documents were prepared by someone who doesn`t know what they`re doing - and that they client should not get involved in a rinky-dink " situation like the one that`s been presented.

The next reason is that if something does goes wrong and the investment ends up going into litigation, any good litigator or trial attorney will gain an unbearable advantage if the documents were not professionally and thoroughly prepared. You don`t want to be in that situation. Attorneys tell me all the time that they love LegalZoom and other legal self-help companies. Why? Because they make 10 times more money on the litigation than they would ever make by drawing the contracts. Therefore, it should be clear and obvious that it`s never a good idea to do it yourself.

Understand that the private placement materials, the operating agreement and all of the other documentation that is necessary to do a thorough and complete syndication deal needs to be accurate, all materials need to be synchronized with one another, and if the documentation is weak or if it says one thing in one set of documents and it says something different in another set of documents, you will not receive the protection of the private placement that you thought you were going to receive.

It comes down to the old concept of "penny wise and pound foolish. " You may save a few dollars in legal fees on the front end, but you will pay in the long run. And this is never something that we endorse. Our program teaches promoters how to maximize their return on the investment they make in the deal. We help investors to procure investors and we show them how to close those transactions successfully and profitably. If you take shortcuts, you will pay. Remember the old oil filter commercial that said, Pay me now or pay me later "?

Never discount the value that a competent attorney brings to the table. Questions such as what type of entity is relevant for you, what state laws are you subject to, and a host of other questions, will always come up that require counsel to help you to navigate. Don`t try and do it by yourself. It will not work in your favor. It may seem like a good idea on the front end, but it`s not very long before you realize that your failure to raise money is directly related to the quality of the work product that you put into the investor`s hands. Further, if something does go wrong, you stand to pay dearly for the error or judgment that you made in trying to be a lawyer to your own deal. It`s not a good idea. We don`t endorse it, and we won`t support it by sharing forms.

Syndication is the top of the real estate mountain. Successful people don`t fall on to the top of the mountain. Do the work that is necessary to get on top and to stay there.

My only goal for the people that get involved with us is to help them to be successful. And doing your own paperwork is not a success formula. There is a right way to do it and there are all the other ways. Don`t do it any of the other ways.

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Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker, advisor and astute investor.

Joel is President/CEO of Bullseye Capital (, a full-service real estate company that supports owners and buyers of real estate assets with brokerage, leasing, property management, and mortgage services. The company also provides investment opportunities to accredited investors.  A leader in real estate syndication, the company invests in properties and offers seminars to assist others in acquiring the skills needed to raise syndicate capital to acquire properties. Imagine knowing how to pool funds to purchase any real estate investment, whether it is for single family, multi-family, commercial, or another kind of investment property. For full information, go to