Investment Offering Information – All investment offerings which have more than one investor are subject to SEC guidelines which we of course strictly adhere to. If you decide to potentially participate in any investment offering, the list below will explain the main documents that you should be receiving and very carefully reviewing before entering into any agreement. These documents should have all the details to make an informed decision.
Business Plan/Property Offering – The business plan or offering goes over all the details of what you are investing in. It typically includes information on the type of property desired or the property itself, financial analysis, operations, market analysis, and investment objectives.
Private Placement Memorandum (PPM) – This is a legal document stating the objectives, risks and terms of the investment involved with a private placement. This document outlines the type of investment, detailed description of the business, financial overview, management or sponsor biographies, sources and uses of funds, and risks to name a few. An offering memorandum serves to provide buyers with information on the offering and to protect the sellers from the liability associated with selling unregistered securities.
Operating Agreement (OA) – Most private placement opportunities are created with a Limited Liability Company or LLC. The operating agreement is an agreement among limited liability company “LLC” members governing how the LLC’s business will be operated. In a group investment it will cover how the investment will be operated including but not limited to how fees, expenses, and income are handled or disbursed. It will also describe when and how you can sell your ownership, when you will be paid back, and how the company will be terminated at the end of the investment. It is essential to review this document before investing in the group investment.
- Subscription Agreement (SA) – A subscription agreement is an application by an investor to join a limited partnership. This helps the sponsor/manager of the investment evaluate the investors’ suitability and qualifications for the investment. It is required that the sponsor/manager collects these from each of the investors in the opportunity. Private equity real estate investments can be very lucrative and exciting to be involved in. A well respected and reputable company will want you to do your due diligence before investing with them. The managing member/sponsor will provide you with the documents you need to review before investing. Make sure you do your due diligence, and review these documents, and ask any questions you have before committing to the investment. That way you will feel comfortable that the investment you decide to participate in has a high degree of being a successful investment for yourself.