23 | The Different Avenues of Crowdfunding and Capital Raising with Mark Roderick
Today's guest on the Making Money in Multifamily Real Estate Show is Mark Roderick
Mark is one of the leading crowdfunding and FinTech lawyers in the United States He has in depth knowledge of capital raising and securities law. He represents many portals and other players in crowdfunding. He has a blog at Crowdfundingattorney.com. It provides readers a wealth of knowledge for legal and practical information. He also has a crowdfunding event across the country and represents industry participants all over, all around the world.
In this episode we cover:
\u2022 The history between crowdfunding and real estate capital raising \u2022 The process of verifying an accredited investor and common practices used in the industry \u2022 The liability of a sponsor once you verify an investor\u2019s accreditation \u2022 Different sections of the tax code and how they can be used to fund a deal \u2022 What you should to as an investor to vet a sponsor in a fundraised dealQuotes from the episode:
\u2022 \u201cDave Morgia: So just to be clear, Mark, if you are taking that step, whether it be verified investor or some other company vetting the investor, if you are taking that step to validate their accredited status, as a sponsor or a general partner, how much responsibility do you have after that point as far as that goes?\xa0
Mark Roderick: Zero is the practical. That's the thing. You are not required as the GP to use Verify Investor. You can do it yourself. You can ask the investor for his or her tax returns or for a letter, to get a letter from his or her accountant. Some people say, "Well, I'd rather do it myself". Terrible idea, because if you make a mistake and it screws up your whole deal, now everyone can sue you and say you weren't careful enough, your assistant lost the piece of paper. So you assume liability for making a mistake whereas if you get the third party to do it, you are, you [inaudible 12:59], you collect your $200, you have absolutely no liability. So it is a no brainer to use the third party. "A tax return is only a moment in time. When you look at a business, especially a small business, and how they operate the bank statement. Their weekly and monthly is indicative of how they operate the business.\u201d\u201d
\u2022 \u201cWell, that's a great question. If you are a non-accredited investor, and you were investing in a Regulation A deal, what you are investing in is not the project. You are investing in the sponsor. So you want to look at the sponsor's track record. So in a Regulation A offering, it's required to give all kinds of information about the sponsor's track record. You want to look at that and make sure it's a positive. And then you really want to Google the sponsor, because it's all about the sponsor. A first time sponso
*****Thank you so much for listening to the Making Money in Multifamily Real Estate Show! This show covers everything to do with Multifamily Real Estate Investing to help you, the listener, become an expert in your real estate ventures. The host, Dave Morgia, brings on guests who are already experts in their respective fields to discuss what principles and practices they follow that have helped them achieve their success so far.