Muchos hacen esto con inversionistas… y es ILEGAL (Abogado lo explica)

[Music] What's up game players? I'm here with Paul and he owns a law firm. He's part of a law firm where they specialize in syndications. And Paul, thank you so much for being here. Can you tell us a little bit more about your firm? Yeah, thank you so much for having me. Um, my firm is based out of Cleveland, Ohio. And when you do work like syndications, which is just stacking up other people's money to pay for something that you can't pay for yourself, uh you can do that um all over the country. Uh because it's actually federal law. Um so we help um entrepreneurs buy big things like apartment buildings or storage facilities or new businesses or existing businesses. And uh we do that with um some exemptions from the Securities and Exchange Commission. And all that really means is I put a bunch of paperwork together for you and then we make sure that you're compliant. One part of being compliant is registering your business at the SEC Securities Exchange Commission. Right. That's right. And that is uh part of the government. Correct. Yep. That's a federal government requirement. That's right. Right. You know, in the Hispanic community, sadly, and I see it all over also with anybody, but honestly, I see it a lot in the Hispanic community where people raise money from multiple investors that are not accredited and they're not even registered. Can you tell us the things that you're not allowed to do? Yeah. So, what you're not allowed to do is raise money from people where they're going to expect to make passive money on your hard work. Um, if they don't have an exemption, so if you raised from uh one person and you put a mortgage on the property, that's okay. You don't have to call, you know, you don't have to let the SEC know about that. But if you're raising from more two or more people, you have to really consider um whether or not you got to do the SEC compliance because you are selling a security at that point. People are giving you money uh expecting a profit on that money for doing no work themselves. You're putting all the work in. So yeah, it happens a lot. I mean, I've I've worked with um folks that have been doing this for 30 years and this is the first indication they've ever done because they didn't know what they were doing was wrong. Yeah. And many times it's okay because people get away with it because the deal works out, right? But if it doesn't work out, that's the risk and that's where uh lots of people get in trouble. And real estate is very risky. I have seen a lot of lawsuits um where you know frauds do happen. They're real. Uh a lot of people get scammed and other times they they don't really have a bad intention but right they were ignorant and they didn't do it right. And then the person that raised the capital the wrong way finds themselves in a really tough position. Um it's very risky, not worth it in my opinion. How are they not supposed to solicit funds? Sure. So that's the thing is you don't want to ask people for money until you disclose all the risks of the deal. And that's what this paperwork really does. that talks about if you're doing a new build in Columbia, South Carolina, and you don't tell people that, hey, we could lose everything, like if we're in the middle of a, you know, 25 single family development and all of a sudden, uh, the market takes that, uh, tank, uh, and there's no one buying, everyone's going to lose their money or at least lose a lot of their money. So, you um, if you're soliciting investors that you don't know, you have to do this paperwork that we've talked a little bit about. uh called the syndication, right? And um also the private placement memorandum, right? That's right. Yeah. That is the big document that talks about all the risks of the deal. So if it's a new construction project, if it's a value ad project, that's where you talk about that you're going to, you know, compete with other um similar developments. You have the risk of contractors maybe not doing their job like they're supposed to. Um, that's where you disclose all the risks of a real estate project. So, your investors um will at least be given the opportunity to look at a project with open eyes and understand the risk before they give you the money. Right. I really do appreciate your insight on this because I I just see so many people out there who just don't know and sadly a lot of public speakers are spreading a lot of misinformation and they go out to this con conferences and they're constantly telling people that it's just okay to raise money from multiple people without taking all the proper steps. Sure. To protect your project, but also protect the investors. That's right. Yeah. And and do people do it and get away with it? Yes. But that's not a good way of doing business because if you do um unfortunately sometimes people's first deal is their last deal because they uh really don't know what they're doing. And the internet is great because you can learn so much so fast. But it also uh you can learn too much too fast uh and sometimes think that you're you've you've figured out a way to get around the system or you have money to invest and you get excited about somebody's video and it turns out they really don't know what they're doing. So, um, having somebody having a really good mentor help you understand kind of the steps that you should be taking on your own learning journey and also, uh, doing things the right way. Um, is is a good long-term strategy for sure. I really do appreciate this because I I actually a lot of content around this and I tell people the right way to do things, but I really wanted my audience to hear it from an attorney. So it's not just me saying it. Sure. It's someone that has the credentials to provide proper information to us. Yeah. Yeah. Happy to happy to share. And and a lot of these principles we're talking about, it's very common sense, right? When you take a step back and you're like, well, you know, you have u a a friend that has a good chunk of money that's looking to invest like, but what do they really know? These documents give them the opportunity to really understand that there's although although it's a it's an assetbacked investment, right? Because you there you could in all likelihood you won't go down to zero with an investment like you might actually be able to do in a in a stock or one of these crypto opportunities, but you can lose a lot um on someone's bad either mismanagement or bad management. Um so yeah, just got to be careful. I got a question for you. Um, when I raise money, I typically just put a a promisory note that is then create turn into a private mortgage that is recorded in public records. We also provide um policy insurance to our lenders. Is that something you can do when you raise from multiple investors? Yeah, so you can do that. The problem becomes every state is a um first to record state. So what some people do is they have like an LLC that would be the mortgage or not note holder and then there's a bunch of people in that LLC that are ultimately getting their money protected by that mortgage. The problem is is that itself is a security. So, when you're doing any more than one person um to to lean that property, you're now in a security, you know, situation, you should be thinking about it. You can do multiple mortgages, but if if you're the person given the money, um you want to make sure your mortgage is first because that's the most protected, right? Right. Um the second through fifth or 10th or whatever it might be, uh when you get to the back of that line, it'd be very unlikely for you to get much if any of your money back. So, that's a problem with using um a bunch of notes and a bunch of mortgages is that um some Well, we never done that. Typically, I just work with one investor per project. Yep. Um that's how you should do it. Yeah. But if you were syndicating funds, per se, can you also protect their investment? That's right. So, you would do what we do for a lot of folks, a debt fund, which is we get 10 people to put $25,000 in. You have $250,000 as a pool of money. That fund would lend that money to the borrower that's building the house or whatever it is, and then that fund would have the mortgage. So, all 10 people's money would be protected by that single mortgage. Um, and that's how you'd want to do it. Awesome. That is so awesome. Um, thank you so much for sharing all of this. Uh, just one more question because I just get this a lot. A lot of people also think that you don't have to syndicate if you can just go straight again to multiple investors, solicit their funds and and push the idea to basically create a partnership like an LLC or LLP. and they think they can get away with it, that is completely fine. I had heard from a different attorney that you cannot do that because that's basically syndicating. That's right. Finding a way around it and eventually um you'll get in trouble. Yeah. So what what people like to call that is a JV or a joint venture where they just have people, you know, hey, we got 12 people involved, but only two of the 12 are actually doing any of the work. Yes, that's a syndication. Um, just understand that like your idea of getting around the paperwork has been thought of probably 75 years ago when the act actually uh was created. So if you're raising any sort of significant money, reach out to America. she'll set up a call with me and we can just walk through um if it makes sense to do. Now, if you're, you know, I know a lot of things come into play, right? Like if you're only raising $100,000, but you're getting it from 10 different people, you're thinking, well, do I really have to spend, you know, a a large chunk of that 10 to syndicate the deal and do the paperwork properly? Well, it's something that you want to talk to an attorney about so they can kind of walk you through through that. So, in that scenario, yes, it's a security and yes, there's risk to those investors, but could you pay that $100,000 back to those 10 investors? You probably could. It would take you a while, right? It would take you a couple successful projects, but you are in a securities uh situation. And if I were you, I would work harder on finding that hundred from one person than easy 10, right? you can and you'll be surprised how many people do have that much money and are willing to invest it. Um we have investors that lend us $300,000, a half a million, uh $200,000 and there there's actually a strategy to find them and they're out there. Sounds like you got to be part of the mastermind, right? How can people contact you? Uh, so I have a website. It's called vincentesquire.com or I'm on the internet. Um, or um if you want to watch a video uh that we put together about syndication, it's that'll bring up a landing page that you put your email in and you can watch a video uh of us talking about it for 45 minutes for a real estate project. So, if that's interest to you, that's got all our contact information and stuff on it, too. So, and uh yeah, thanks for having me on.