Kim Lisa TaylorSecurities Attorney, Founder, Syndication Attorneys, PLLC · Corporate Securities Attorney, 2x Best-Selling Author, Nationwide Speaker | Private Placement

Would You Trust a Stranger with Your Investment?

20 Sept 2024 · 1 min

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In this segment, the speaker challenges the idea of investing with an unknown individual, emphasizing that investors are unlikely to hand over money to strangers. The discussion highlights the necessity of establishing a pre‑existing substantive relationship with potential investors, as required by SEC Rule 506. The speaker outlines a practical timeline: investors must be met and vetted before a purchase‑and‑sale agreement is signed for a specific property, meaning the relationship should be formed prior to the property being under contract. This underscores the importance of relationship‑building and compliance in private placement offerings.

Chapters

Would you really invest with a stranger, like, in this day and age, and you've never heard of them? You don't know anybody in your group that's ever heard of them. Are you really going to give them your money? No, right? So the reality is, is even if you're advertising, you still need to build some sort of relationship with potential investors. And under Rule 506, it has to be a pre-existing Substantive relationship. All right. We try to put it as like a timeline, like with, like what, you know, Kim has said, that if it's a specific property, it's prior to you signing that purchase and sale agreement, right? So these are people that you have met before you have gotten the property under contract.