The Book on Investing in Real Estate with No (and Low) Money Down by unknow

Author:unknow
Language: eng
Format: epub

Legal Issues with Raising Money

Alright, it’s time to talk about the legalities of raising private money. This is a highly regulated industry, and I am not a lawyer, so I strongly encourage you to speak with one before attempting to raise money.

The biggest legal issue you may encounter is that of “soliciting for money” (publicly asking for money). Over the past 80 years, some extremely strict laws have been passed that govern the advertising of money in the United States, but the laws are changing, and the legality of “general solicitation” is transforming almost daily because of the JOBS Act. However, even with the JOBS Act, you still need to follow numerous rules and conditions before you can advertise for money (such as only allowing verified accredited investors31 to invest).

If you are just starting out, you would be best off steering clear of the “general solicitation” game and just saying no to publicly advertising that you are raising money. Once you get more experienced, you can jump into that game. Instead, raise money by allowing people to come to you, as we’ve discussed. If you network and let people know what you do, they will come to you if they want to invest. We’ve already covered this extensively: it’s all about building relationships.

No matter how you plan to raise money, to avoid legal problems, it’s essential that you have your paperwork in order. Sit down with a qualified attorney to discuss the correct legal entity, paperwork, and what you can and cannot do when raising funds.

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