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Breaking Down the Nuances of the Fund of Funds Model - E745 - CFC - Asym Capital

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Breaking Down the Nuances of the Fund of Funds Model – E745 – CFC

When I have a legal question about fund regulations, there is one person I have on speed dial…

Mauricio Rauld is an expert attorney with over 24 years of experience practicing law and studying the details of real estate syndication.

That’s why, today, I’ve brought Mauricio on the show to explain the trending strategy of the fund of fund model and the nuances of structuring a deal like this to raise capital for real estate.

People have been trying to get around the #1 rule that you cannot raise capital for other people unless you are a broker-dealer…

But if you are a co-GP, you don’t have to get a broker-dealer license because you have an issuer exemption…

Which brings us to the fund of funds model that allows you to create a fund and raise money then invest it in other people’s deals.

The catch to raising capital with this model is that, when you invest in someone else’s deal, you are now investing in securities rather than real estate.

This opens you up to scrutiny from the SEC and whether you are now considered an investment advisor to your clients.

You have to check your specific state regulations and apply for an issuer exemption in hopes that your assets under management and qualified clients fit the standard.

There are many stipulations to follow, which is why having a good relationship with your attorney is crucial.

And if you are thinking that becoming a broker-dealer seems easier at this point, just remember that almost all of them aren’t at the institutional level and familiar with the nuances of securities.

So, tune in today to learn how you can implement the fund of funds model in your company and avoid the pitfalls of working with securities to raise capital!

Take control,

Hunter Thompson

Resources mentioned in the episode:

Mauricio Rauld

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