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I mean if they’re advertising via Insta or whatever that is, it’s probably not a great deal they’re looking for money. If it was a good investment they’d have all the money they need from private investors.
I don’t completely agree with the above - lots of folks are using 506(c) to raise money allowing them to advertise on social media. That doesn’t mean it’s a good or bad deal (just bc a deal isn’t advertised doesn’t make it more likely to be better). Just like any other deal you’d want to do your DD to evaluate whether it’s a good opportunity and suitable for you.
Subject Expert
Look up 506b vs 506c offerings. You’ll understand why this says “for accredited investors only”.
I wonder what the IRR is. I mean, basically you’re funding the development for them. These happen all the time in all sorts of flavors.
Subject Expert
25% IRR indicates pretty high risk IMO.
If they’re turning to Facebook, it’s either a scam or terrible. Ever heard of the saying “sounds too good to be true, then it usually is”? With real estate it applies in 100% scenarios. Any good opportunities are actually taken my institutional investors
If they are doing it in social media, that is because all credible investor said no to that “opportunity”. Stay away.
Subject Expert
Not necessarily. 506 C offerings allow you to advertise on social media as long as you only accept accredited investors.
I’d say 506 B offerings are more risky because they allow “sophisticated” but not accredited investors. I’d say those people are more likely to be duped, and any investment they make is likely to be a bigger portion of their NW, which is kinda scary.
These are called alternative investments, and they are raising money through syndications. I have invested in many syndications. Yes, advertising via social media doesn't mean it is or isn't a scam. However, I can tell you that you are completely at the mercy of the General Partners (GPs). The PPM you sign is created to protect the GPs, not you. They also can give you the conditions for a capital call, and they don't have to be transparent about how the deal is going. It is risky, but if you trust the GPs, it can meet or exceed their pro formas at times. Also, remember, development deals are very risky.