Aug. 5, 2022

Crowdfunding vs Syndications with Gene Trowbridge

Do you want to learn how to structure a deal in a way that it won’t be a security?

Most people who are into real estate investing are already familiar with syndication and crowdfunding, but there are still those who confuse deals structured as a joint venture with those as a security.

One mistake and you can get into trouble with the SEC. So join us today as Gene Trowbridge educates us about this matter.

Gene Trowbridge has 20 years of experience in real estate syndication and 25 years as a syndication (SEC) lawyer. He is one of the founding partners of the Trowbridge Law Group LLC, where his law practice focuses on the syndication of commercial and investment real estate, through both debt and equity.

In this episode, Gene enlightens us on the legal side of syndication and crowdfunding as he talks about the SEC in line with deals structured in security.

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What you'll learn in just 21 minutes from today's episode:

  • Understand what syndication and crowdfunding are all about as well as how the two works
  • Discover what security is, how different it is from a joint venture, and learn how to structure a deal in a way that it won’t be a security
  • Find out the biggest mistakes real estate investors make that later on lead to them getting in trouble with the SEC


Topics Covered:

01:02 – How Gene defines syndication and crowdfunding

06:24 – Is there a difference between syndication and a joint venture?

07:09 – Joint venture vs. security: Things the SEC looks at in determining whether it’s a security

10:56 – Joint venture vs. security: Members should all be active investors in order for the deal to be a security

12:54 – Scenario: How to structure a single-family home deal in a way that it won’t be a security

15:17 – Biggest mistakes real estate investors make when it comes to getting in trouble with the SEC

20:23 – Connect with Gene Trowbridge

Key Takeaways:

"There is no difference. A syndication could be a joint venture. It could be a limited partnership [with] two or more people; it could be an LLC – whatever entity you want to combine these people together legally.” – Gene Trowbridge

“If you’re in the deal together, the only way you can do it and not make it a security with two people is you put together an LLC and the two members go forward, making equal and unanimous decisions. That’s the only way you can do it. If you make it a limited partnership, you’re in trouble, because in a limited partnership, there is a general partner, and a general partner, by definition, makes it a security. So it has to be a member-managed LLC.” – Gene Trowbridge

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