506b offering vs 506c offering
SEC Rule 506c and Rule 506b are rules within Regulation D that specify requirements and limitations for real estate syndication. Rule 506b restricts the general solicitation of offerings and limits the investor pool to a maximum of 35 non-accredited investors in the syndication deal. Regulation D rule 506c allows the real estate syndicator to engage in general solicitation of an offering, and they can raise unlimited capital. Each investor in a Rule 506c offering must be accredited, and the syndicator must take reasonable steps to verify the investor’s accreditation.
We have outlined the steps to complete ahead of time in preparation to invest in our Rule 506c accredited-only deals:
Decide How You Will Take Title (Legal Name in Investment)
Will you be investing with your IRA, 401k, LLC, or individual or joint registration? It’s important to decide your title early so you can consult with your CPA, attorney, and/or financial advisor to ensure you understand the specific tax and estate planning for the title you choose.
Prepare Your ACH Instructions for Distributions
It’s important to update your ACH instructions to make the distribution process go smoothly. Sending distribution checks is not recommended as they can get lost and are difficult to track.
Get Funding In-Place
Our deals are first-come-first-served, so as soon as the funding window opens, we encourage investors to sign the docs and fund as soon as possible to secure their place in the deal.
Obtain Accreditation Document(s)
For a 506c syndication offering, all investors must be accredited. You can work in advance to obtain a Third-Party verification letter (see template below) from qualified issuers as defined in the template.
Accreditation Requirements
- Have an earned income of at least $200,000 (or $300,000 joint income with a spouse) in the previous two years and reasonably expect to continue to maintain that income
- Have a net worth of at least $1 million alone or jointly with a spouse
What are the other ways to verify accredited status?
Aside from getting a letter from your CPA/lawyer using the templates provided, the other two options are:
- Take a Series 7, 65, or 82 test and maintain good standing (will satisfy you to invest being a non-accredited investor or sophisticated investor)
- Difficult method – A website like VerifyInvestor.com will be able to third-party certify you. However, they only last for less than a year, and they will ask for a lot of documentation (i.e., tax returns, W-2 forms, bank/brokerage statements, credit report, etc.)
If you are having any difficulties, or are on the line and feeling blue, and you don’t quite qualify, please reach out to:
And we can provide additional guidance.
Accreditation Template
We have provided a few templates you could download/edit to send to your third-party verifier, as this is the most efficient way of proving your accredited status – remember the last thing your professional wants to do is spend time on this, so make it an “easy-yes” for them.
NOTE: These are just templates. If your CPA/lawyer would like to add additional information to your letter, that’s fine!
Additional FAQ
How do Investment Portals Work?
- Signed PPMs and subscription docs
- Downloadable K-1 tax forms
- Your total investment history
Note: The signing portal is different from your Wealth Elevator portal, which is meant to house e-courses and educational content
What is the Safest Method to Send Funds?
- Avoid sending wires to instructions received via email. Hackers can intercept and swap wire details.
- This is why we use our secure signing portals that generate wiring instructions directly from your investor dashboard—this adds a layer of security.
- Wires can cost $20–$45, depending on your bank. Many investors say they usually have a few free wires per month, depending on their status with their bank. Credit unions often have lower fees.
- Never send a paper check—it’s slower and less secure, and due to those reasons, we do not accept them. As a side note, wires are standard. It’s one of those things you just can’t cheap out on. Very similar to if you’re using TurboTax, let us know if you need a referral to a
CPA, Lawyer, or another vendor here.
What Happens Once I’ve Wired My Funds?
begin your journey to financial freedom!
My name is Lane Kawaoka, and I hope my blog/podcast will help families realize the powerful wealth-building effects of real estate so they can spend their time on more important things, instead of working long hours and worrying about their financial troubles. There are a lot of successful families with good jobs (teachers/engineers/programmers/finance), yet they struggle to make ends meet financially. It is their kiddos who ultimately get the short end of the stick. Being a Latch-Key Child growing up, both my parents had to work, and I was left home alone after school to fiddle with my thumbs.
With Real Estate, you are able to grow your wealth exponentially faster than the conventional 401Ks and stock investing; therefore, you are able to escape the dogma of working 50+ hour weeks at a job that is unfulfilling. And if you are one of the lucky ones who happen to do what you enjoy… well, good for you 😛
Money is not everything, but it is important because it gives you the freedom to live life on your terms.
Annoyed by the bogus real estate education programs out there (that take money from people who don’t have it in the first place), I set out to make this free website to help other hard-working professionals, the shrinking middle-class. I hope to dispel the Wall-Street dogma of traditional wealth-building, and offer an alternative to “garbage” investments in the 401K/mutual funds that only make the insiders rich. We help the hard-working middle-class build real asset portfolios, by providing free investing education, podcasts, and networking, plus access to investment opportunities not offered to the general public.
“The true meaning of wealth is having the freedom to do what you want, when you want, and with whom you want.
Building cash flow via real estate is the simple part. The difficult part occurs after you are free financially to find your calling and fulfillment.
But that’s a great problem to have ;)”
excerpt from The One Thing That Changed Everything
