Private Lending - Do I Need an Accredited Investor For My Private Lender Program?

In Part 1 of this article, I defined what an "accredited investor" is and in this article I will address the issue if a real estate investors needs to deal with "accredited investors" or can they use people who are not "accredited investors" as part their private lender program.

Under the Securities Act of 1933 (the "Act"), a company or person that sells securities must register the securities with the SEC or find an exemption from the registration requirements. The Act provides companies or people with a number of exemptions. For some of the exemptions, such as rules 505 and 506 of Regulation D, a company or person may sell its securities to what are know as "Accredited Investor". But is this the only exemption for the typical real estate investor.

Generally, any loan or securities offering that is not exempt under the private offering exemption of the securities act of 1933 (Regulation D) is a public offering. This means that if you aren't using an exempt offering you are making a public offer and must register with the federal SEC or possible your state SEC.

Each and every state has it own definition of exempt offerings and these aren't considered to be public offering. Most states will allow a real estate investor to make a certain restricted number of private lending transactions without having to register with that state SEC? In some states you may file some paperwork which is considerable lighter than a full blown registration process.

For example in Pennsylvania, a real estate investor can make no more than 25 loans to other Pennsylvania residents as long as they do not do any public advertising or using the internet to promote the offering. In this case, the 25 individuals do not necessarily have to be "accredited investors". The state does require a notice but not a long and tough registration process.

Each state has its own rules and it is very important that you seek professional advice on the rules and regulations in your state.

I invite you to learn more about Private Lending and get my new FREE 20-page ebook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by clicking here http://realestatewealthtoday.com/FREE-eBook.html

Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lending Presentation Kit

Download your FREE eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders"  and learn how to fund your real estate deals with Private Lenders!

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