How to Build Your Empire Investing in Small Apartment Projects Close to Home with Chris Pomerleau

In this episode of "Raise Private Money Legally," host Kim Lisa Taylor, Esq. interviews longtime client Chris Pomerleau of LeavenWealth Capital LLC. Kim and Chris discuss how Chris and his team have built an empire by buying small apartment complexes close to home.

The Episode at a Glance:

• The pros and cons of investing in small multifamily complexes
• How to gauge the viability of potential deals
• How to best manage your investments
• And the outlook for the market in the coming months

Guest Bio

As Co-Founder and Director of Investment Strategy at LeavenWealth, Chris oversees the acquisitions of assets and business development activities. He also directs the overall investment strategies of LeavenWealth.

Over the past seven years, he has acquired 2,700 apartment units worth $228 million throughout the Midwest. Chris owns Brick Town Construction, Brick Town Property Management, and Liquid Lending Solutions.

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👀 Watch this episode through our YouTube Channel. Click here: https://raiseprivatemoney-re.buzzsprout.com/1610152/13253695-how-to-build-your-empire-investing-in-small-apartment-projects-close-to-home-with-chris-pomerleau

Transcript

Kim Lisa Taylor:

Good morning, everybody. Welcome to Syndication Attorneys' free monthly podcast where we talk about topics of interest to real estate syndicators with the opportunity for live questions and answers at the end of the call. I am attorney Kim Lisa Taylor.

Before we get started, please note that all of our podcasts are recorded and also live-streamed, and they may be used for future promotion, posted on our website, or broadcast in a podcast available to the public. We will have a live Q&A session at the end after Chris and I talk for a bit. If you don't want to have your voice recorded, then don't raise your hand. You can raise your hand if you want to, or you can just put your question into the Q&A button at the bottom of your screen. Also, if you want to just have a question that's involved or confidential, then you can schedule a live one-on-one call at our website at syndicationattorneys.com.

Information discussed during this free podcast is of a general, educational nature and should not be construed as legal advice. Today, our topic is: “How to Build Your Empire Investing in Small Apartment Projects Close to Home” with our special esteemed guest, Chris Pomerleau. Chris is a long-term client of Syndication Attorneys. We've seen him grow from, gee, I don't know … how many years ago did you start doing this, Chris?

Chris Pomerleau:

Well, I started investing in real estate 10 years ago. I got into multifamily five years ago. You and I met four years ago.

Kim Lisa Taylor:

We met Chris early in his syndication career. I've just seen him excel, and he finds deals when other people can't. He's got some ways of doing things that seem to be a little different than the mainstream, so I think that it's something that everybody could benefit from learning, and that's why we invited him to our podcast. Chris, thanks so much for joining.

Chris Pomerleau:

Kim, I appreciate you having me.

Kim Lisa Taylor:

Tell us about your previous background. You have an interesting background.

Chris Pomerleau:

I do. Well, I practiced law for 10 years. I'm now a “recovering attorney.” But, I graduated law school in 2010. I was in the military for three years thereafter, so I had passed the bar exam. I was ready to practice, I just was in the military for three years. Then from 2013, 2023, I was an attorney. Simultaneously, I was building this real estate gig that I have going on, which has obviously turned into a number of relatively busy and large businesses.

Kim Lisa Taylor:

Cool. That's exciting. There is hope for any attorneys who might be listening to our podcast … life after your law practice, or there can be.

Chris Pomerleau:

It's possible.

Kim Lisa Taylor:

Yes. Or you can passively invest with someone like Chris who has deals and continue doing your law practice. But, not just law practices. We've seen a lot, a lot of our clients who have transitioned from other careers into this and they're doing this as their full-time gig now. They're pretty happy that they made the transition. So, it can be done. Or if somebody just wants to augment their income or if you're looking into your retirement and saying, "Wait a minute, I don't think these dollars that I'm saving are going to do what I want to do in retirement," so how can we maximize benefits from that? There's all kinds of opportunities in syndication for people that have those desires. 

All right. How did you learn about investing in multifamily?

Chris Pomerleau:

For the first four years, I just did single-family stuff. I read “Rich Dad Poor Dad” during law school, but I didn't even know how I had time to read the book during law school, let alone I certainly didn't think I could implement what I thought I was learning. It wasn't until 2013 where I got out of the military, I got a decent occupation and salary going that I was like, "I'm going to try this single-family thing."

It worked as far as taking advantage of the benefits of real estate, but I was doing everything myself for four years with my dad. Every weekend, and a lot of weeknights, we'd be laying the flooring, changing toilets out, painting. It was quality family time, but four years later I had four single-family homes and I was like, "This is not really scaling the way I wanted it to."

In 2017, I took the jump to multifamily. And to be honest, it wasn't that difficult of a jump. I'm glad I did what I did for those four years, but it's a lot of the same metrics, the same bank discussions and insurance discussions. So, I'm really glad I made that jump. But, the biggest thing for me to learn was after getting a chance to meet you was how to run the syndications and start really partnering with investors from all over the country. That was the biggest learning curve, to be honest. That was a bigger learning curve than just jumping into real estate.

Kim Lisa Taylor:

Now, did you ever go to anybody's formal training classes or anything like that, or you just learned it on your own?

Chris Pomerleau:

I did a lot of self-taught stuff. I mean, I was all YouTube and podcasts. I think I paid some initial fees to three, or four, or five different coaches. And at that time, coaching wasn't that big of a business, so those coaching things I was a part of were really just pre-recorded videos. It wasn't like there was any one-on-one discussions or an actual coach even. But, I learned a lot from YouTube, and podcasts, and books, and meetings, and a hundred coffees, and a hundred lunches later. It just took a lot of grinding, I guess.

Kim Lisa Taylor:

Well, so there is hope for those of you who are trying to do the self-taught route, but there are certainly a lot of real estate trainers out there now that do live events as well as have home-study courses. If you're like me, I buy home-study courses and then I don't take them. I've learned not to waste my money on that anymore. I can go to a three-day event. I can learn a ton of stuff. I'm really good with that, or involved in a once-a-week call. That stuff's all good. But, it all depends on what your learning style is. There is a multitude of ways to learn how to invest in this field, and it sounds like you're going to have some opportunities for people that we'll talk about at the end of this call. You started with multifamily you said five years ago?

Chris Pomerleau:

Yeah.

Kim Lisa Taylor:

How many units do you have now?

Chris Pomerleau:

2,700.

Kim Lisa Taylor:

Wow. That's a lot in just five years. That's a big jump. What is the size range of the projects you started buying? Were you buying fourplexes or 10-plexes or what?

Chris Pomerleau:

It was kind of a steady increase. After the first four single-family homes, I tried a duplex. Then it was a nine-unit, and then it was a 20-unit. Then it was an 87-unit. Then from there, we have all the way up to a 262-unit, a 235-, a 232-, but we also still have some fours, and 16s, and 12s. I'm kind of a real estate junkie, so it's kind of all over the board. It's just a little different how we structure each one of those deals.

Kim Lisa Taylor:

What is the geographic area? Are you buying stuff that's all within two or three hours of where you live or are you buying all over the country?

Chris Pomerleau:

My company's name is LeavenWealth Capital and we're based in Omaha, and this is where I live. I was born and raised just outside of Omaha. I started here, single-family homes, duplexes, even the nine- and the 20-unit we started here. I think the first jump out of the area was a 52-unit down in Kansas City, and that's when actually you and I started working together first. I had actually met you in person at one of the Jake & Gino events, but that was the first time we started working together, and that was my first syndication. That was back in 2020 where we closed, but you and I started talking in 2019.

We started local, and then we just started branching out. For a while, the rule was let's not invest in anything unless it's within a three-hour radius drive. Because we can drive to almost all of our properties. But now we're in seven states. We're in Rapid Citiy, Sioux Falls, South Dakota, all the way down through Iowa, Nebraska, Missouri, Kansas, Oklahoma, and now down into Texas, the Dallas-Fort Worth area.

Kim Lisa Taylor:

Wow. That's fantastic. Tell me about managing these smaller properties. Do you have your own management team that does that or are you hiring professional managers?

Chris Pomerleau:

At first, we were managing our own, the single-families and the duplex. It was once we took the jump to the nine-unit and knew that we wanted to add more, and more, and more that we started utilizing a third-party property management company because that's something they specialized in. At the time, I didn't really want to be a full-time property manager or dealing with some of the things that property managers have to deal with, so I didn't necessarily at first do that. We utilized third-party.

But now, especially after partnering with ... My business partner, still to this day, his name's Collin Schwartz. He had just gotten out of his job around 2017 or 2018 and started building his, at the time, small portfolio, but he was managing things himself. After that business partnership started, we then started managing most things ourselves that were close. Now out of the 2,700 units, we self-manage about 1,300 of those.

Kim Lisa Taylor:

Oh, wow. You have a whole property management, separate property management company with all the right team members for that.

Chris Pomerleau:

That's right.

Kim Lisa Taylor:

As well as are you hiring onsite managers directly through your own property management company?

Chris Pomerleau:

We are for the properties that need it, yes, for sure. If it's a local 30-unit, we may not have onsite. But yeah, we have onsite in Des Moines and down in Manhattan, Kansas. We're hiring the maintenance techs, and onsite, and leasing agents. It really helps, too, because then we know what to expect out of third-party property managers. We understand the ins and outs of that, and I think that's important, too, because I think a lot of people get lost in the sauce as an owner, as an asset manager. It really helps us to know what property management's all about because then we know what they're doing well, but we also understand some of the hard parts.

Kim Lisa Taylor:

So you have this asset management company, LeavenWealth, LeavenWealth Capital, that's asset managing all of these different properties. Just for people that are on the call that might be kind of new, the asset manager manages the investors and oversees the property managers. The property manager is the one who's dealing with the tenants and all of the tenant-related issues and evictions and all those things. They're also probably overseeing any improvements at the properties, right?

Chris Pomerleau:

Right.

Kim Lisa Taylor:

Your asset management team, can you tell us who's on your team, like how many ... I mean, you have us as one of your professionals, but you have other professionals. But also, let's hear about your partners and your admin staff.

Chris Pomerleau:

For the property management company, we have just over 20 people right now. That includes leasing, and onsite, and maintenance people. For our asset management company, LeavenWealth, we have 10. It includes a full-time underwriter. It includes a risk manager and investor relations person. It includes a full-time capital raiser, some acquisition specialists. We have a director of finance who actually was our CPA at a large firm in town here, and he came over and joined our team. He handles a lot of financial items in-house for us. That's really helpful as well. Again, it's a slow process, but just building that team in-house so we can take care of everything ourselves.

Kim Lisa Taylor:

Do you have an office or are people working virtual?

Chris Pomerleau:

It's a combination of both. I mean, our underwriter lives in San Diego. Our risk manager and investor relations person lives in Denver. Everybody else lives in the Omaha area. We have an office as well. We meet in the office two, three times a week, but a lot of it can be done from home now. I mean, with Zoom and starting this investing process just before COVID where everybody started learning how to work from home, we're able to do that, but it's so nice to get together in person as well.

Kim Lisa Taylor:

Well, and you didn't start out that way. It took you time to build up this team, right? I mean, originally it was just you and Collin?

Chris Pomerleau:

Yeah. I mean, I think that's another thing that helped me and Collin, was learning absolutely every step of the process. It wasn't necessarily that we were perfect at it. I mean, I'll never be better than our director of finance when it comes to taxes, and classifying different items on the balance sheet, and figuring out those items, but certainly we had to learn when we were small, you're right. We did everything ourselves.

Then, as we continued to grow and scale and realized that we would be better in wearing the hat of growing the business as opposed to even some of the asset management or underwriting or any of that kind of stuff, we then started hiring out. Maybe to your point, at least we got a chance to do it ourselves, to understand it so we can know what we wanted and we can help oversee it.

Kim Lisa Taylor:

Now, where does the money come from to compensate all these people?

Chris Pomerleau:

It comes from two items. It comes from the asset management fees that we get, and then it comes from the acquisition fees that we get. It's funny you asked that, too, because, obviously, you helped me draft a lot of our documents, but ... I don't know if this is a little person the back of my head speaking right now, but sometimes an investor ... First off, we have over 700 investors now. I mean, I don't think there's a lot of complaints as far as people caring about the way we structure our deals, but there's always occasional questions. "Acquisition fee? You get a fee for finding a deal?" or, "You get paid throughout the process as an asset manager'" It's like, "Well, I'm not on a beach soaking up your money. I mean, we have 10 people on staff overseeing the asset that you yourself are invested in." It's certainly needed, but those are certainly the two biggest sources.

Kim Lisa Taylor:

You just mentioned something, and I'm sure piqued everybody's interest, definitely mine. You have over 700 investors. How did you build that investor database?

Chris Pomerleau:

Just time. I hate that answer, but it's extremely difficult. You could probably get some type of qualification or training as an actual ... Gosh, I don't know, maybe your series 67, 66, 7, and now you have that background, and maybe you mastered in business and real estate, but if you started your very first day with all of those credentials, it'd be very difficult to have just 700 people lined up at your door. It takes experience, and it takes just building that trust.

I think we've just lucked out. We've been successful. I think we're conservative on our approach. I also think that a lot of times we get a lot of repeat investors. But, I think it's the way we've structured it that has kept people in the deal. I mean, I can get into that real quick if you don't mind, because I think that fits into why we have ... There's no wrong way to do this. This is not a shot at any other syndicators or anybody. People have made a lot of money flipping apartments, but that's not what we do. It's not what allowed me to stop my job as an attorney.

You opened it up with, "Hey, if you want to quit your job as an attorney, Chris is proof of how that's possible," but not everybody needs to quit their job. We have a boatload of doctors, and electricians, and engineers, and people that will always do what they love and they just invest with us passively. I chose to do this full-time because I really love it.

But I think the reason we're able to keep people is that we keep them in on all the deals and we're long-term wealth building. That's not just a catchy word to say we have 2,700 units because we don't flip apartments. We're trying to keep them for as long as possible, because I really do want my own children to reap the benefits of that passive income. It's why I don't have to practice law. I have the passive income because I obviously invest in all these deals myself.

It took a long time, but I feel as though the reason we're able to keep people around is because we keep them as part of the deal and they continue to earn money whether they have money in the deal or not. Because a lot of times we'll refinance our deal. We've gone full cycle 56 times.

Kim Lisa Taylor:

Wow.

Chris Pomerleau:

56 times we've refinanced and returned a hundred percent of the money back to the investors. One time we returned 40%, one time we returned 60%, but that was early last year when I started to see rates go up. I just refinanced it in the threes really quickly before rates went up. Not that they won't get their money back in the future. It was only a year in, anyway.

But, I know that I'm being long-winded, but that is why I think people are staying around, is that all 56 times when we've refinanced and we've given that $100,000 investor back all $100,000, they still stay on the deal, and they continue to get 60% or 70% of the income without having any money in the deal. I feel that's what's kept them around, and they've told me that's what's kept them around.

Kim Lisa Taylor:

That's a very important point. In fact, I was having that same discussion with a client yesterday who said that “Our goal is to refinance out these investors after three years and we keep the property.” I said, "Your investors will hate you for that."

Chris Pomerleau:

That's so true.

Kim Lisa Taylor:

They won't like it. We've had clients that have tried that before, and they came back and said, "We'll never do that again because investors hated it." They think that you're using their money to buy the property, and grow it, and increase its value, and then you're kicking them out and you get to keep the windfall, and they don't like that. I always advise keep your investors in the deal.

Now, you happen to choose to keep them in at the same percentage interest that they started with, but a lot of people will change the split after certain investors have gotten all their money back or they've gotten all their money back plus a certain specified return. Then at that point you can change the split, but they're still in the deal, and they're in the deal forever. They won't mind it if you change the split, but if you want to leave them in at the same rate they've always been in, they're going to love that, too. But the thing is you got to take care of your investors so that they'll invest with you again, and again, and again. Once they've got their money back and they're just getting mailbox money, they don't ever want out of your deals.

Chris Pomerleau:

They want the next one.

Kim Lisa Taylor:

You can keep them for 40 years, and they'll bequeath the interest to their kids and their grandkids.

Chris Pomerleau:

That's what we do. We change it. It's 70/30 throughout the process, and then we change it to 60/40 if they get all their money back. But if a $100,000 investor only gets back $90,000, they'll continue to receive a pref on that final 10th, and then it goes to 70/30.

Look, I would love the opportunity for all of our investors to just let me refinance them out, but it's not, in my opinion, realistic. We tried it once, too, actually. We didn't try it where everyone said no so we couldn't do the deal. We tried it, and with your help we did this. We formed two different class A investments, and we offered one class to be just a 10% pref right off the bat, but no equity. They get 10% the entire time. Then when we refinance in year three, they go away, but they made ... the $100,000 investor got back $130,000 at the end of three years, and that was a $4.7 million raise. Zero people chose that route.

Kim Lisa Taylor:

Really?

Chris Pomerleau:

Every other person said, "No, no, no. I want to own real estate. I want to ride this with you," and they all chose the other class A, which was what we traditionally we do. I tried it, but it just didn't work.

Kim Lisa Taylor:

We do have some clients that use that model and it does work for them, but you have to have ... It's a different kind of investor.

Chris Pomerleau:

It is.

Kim Lisa Taylor:

If you're transitioning from single-family investors that are used to being private lenders, that might be a place for them because they're used to having more of a fixed return. You could even offer to pay them monthly. Maybe they're only going to be in it for three years. You can do it with seller financing, too. It's a way that the lender will allow you to keep a seller in the deal without having a secondary promissory note, which isn't allowed. You can bring them in as a special class of investors, just give them a fixed return and then buy them out on a refi. They're usually happy with that.

There are certain people that like that. You may have a pref equity partner that comes in for $500,000 or a million dollars and that's all they want, but they usually want something like a 15% return, and you've got to cash them out. Clients that have done that have been real anxious to get them out of their deal.

Chris Pomerleau:

As quickly as possible.

Kim Lisa Taylor:

Yes. All right. Well, this is really great, Chris. I think that this is going to be really beneficial for a lot of our listeners to hear because a lot of them are just beginning their journey. Some of them are already on their journey. I've got first-time syndicators that are calling me up and all they're seeing are $10 million deals, and they're saying, "Oh, we have to do a $4 million raise." That's a tough position to be in for a first-time raise. If you don't have 700 investors that you can call on, it's going to be hard to raise $4 million, and that does take time. So, how did you meet these investors?

Chris Pomerleau:

Well, a lot of word of mouth. Gosh, we started off with family and friends, anybody close to us. We were somewhat able to showcase things we had done on single-families and duplexes and nine-unit. On that first syndication though, it was 52 units. Kansas City, it was a million-dollar raise. It was scary for me at that time. I was like, "How am I going to raise a million dollars?" But a million-dollar raise now, I'm certain I can make a couple of phone calls and it could just happen like that. That's a great feeling to say, but it was just three and a half years ago where I was so scared on the first syndication just to raise a million dollars.

So, it took a while, family and friends. Then, really, it was just performing, continually being successful on the business plan, and then be able to use those case studies to show new investors. They would tell other investors, they would tell other investors.

We also offer something that I think's been beneficial to us is that ... And yes, Kim, I know that you have to be very safe in how we offer this, but if people invest over a certain amount or if they bring over a certain amount, we can have conversations with them about maybe some class B shares or something, not necessarily to be on the general partnership and make the major decisions, but that has also helped them go out and say, "Look, I have a hundred thousand, but I might have six friends and I know if they all invest, I might be rewarded with some class B shares or something." That's really helped us as well.

Kim Lisa Taylor:

That is allowed as long as you're not paying some kind of commission to those people that's based on the amount of money that they've raised. If you want to give them some backend shares, class B interests are a great way to do it. Because when we file the Form D with the SEC telling them that you're claiming the Reg D, Rule 506 exemption, we're filing for that investment entity that we've created. As long as the person is within that investment entity either as a class A member or class B member, they are allowed to bring in their family and friends and people that they know into your deals.

It doesn't necessarily have to be the management team that has the relationship with the investors. You just have to be able to prove that you didn't go out and generally solicit or advertise if you're doing 506(b) deals, if you're doing 506(c) deals, then that's okay, you can advertise.

But, you also have to be careful if you get an investor that's super excited about your deal and it's a 506(b) deal that they don't go out and advertise it. You've got to talk to them about what those rules are and make sure that they understand that this is a word-of-mouth game. It's one-on-one, and you can't go posting stuff at your country club about this great investment that you're in.

There's definitely ways to do it, and we can help you navigate that. In fact, here's a little plug for my book. On May 11th, we published our new book, “How to Raise Capital for Real Estate Legally.” Highly recommend that you get that book. There is a chapter on capital raising, how to legally compensate capital raisers or finders. It's chapter 26, and we talk specifically about that. So if you're wondering about that or you want to raise capital for somebody else's deal or you want to bring some people in that can help bring capital to your deal, then there are some legal ways that you can do that. All right. What is the biggest drawback to buying the small-plexes, and why did you want to scale up?

Chris Pomerleau:

I think it helps mitigate your risk. If you have a four-unit, which we still buy four-units on the side. .. Obviously, I'm not syndicating four-unit complexes, but ... And you have one go vacant, you're already at 75% occupied. Where if you have a hundred-unit, you would need 25 people to leave to be at 75. That's math.

I'm not saying it's easy just to jump into a hundred-unit, but it's very clear. I heard this forever. Because seriously, everywhere I drove, I didn't listen to music. It was YouTube, podcasts, Audible. I loved learning about real estate and hearing different ways people approached it. I always heard to start bigger as fast as possible or four units take the same out of energy as a hundred-unit. Before I did all this, I was like, "I don't know why you're saying that. That seems ridiculous." It's extremely true.

Again, I'm not saying someone could just say, "I want to do real estate and tomorrow buy a hundred units," but the concept of managing a four-unit and managing a hundred-unit is seriously ... It's so similar. It's just you mitigate your risk better because one air conditioning going out at a four-unit may take your entire month's cashflow, whereas a hundred units, you have all of the other income to help cover risks. It is really what we like to do.

We're doing so much now where our deal flow's so good — knock on wood — where we still get really good opportunities on a 12-unit or a 16 or something, but it doesn't really make sense because of how small that is. So, we'll partner that 16-unit with a 40-unit over here and a 12-unit over here. Then with your help, Kim, and your team, we'll put onto one syndication. Then that way, not only is the investor getting a total of 90 units to help all rely on each other, but, heck, a lot of times they're in different states. A tornado over here doesn't affect the other ones, or a plant being shut down at this location is not going to affect the employers and employees in this location. So, it helps to diversify and just mitigate your risks.

Kim Lisa Taylor:

What Chris is talking about is he does multi-property offerings. They're still specified offerings, for the most part, because he's usually identified these properties in advance and he's working on due diligence on multiple properties concurrently. He's just buying them with one group of investors. It's still a specified offering versus a blind pool fund where you just have a business plan, you just say, "Oh, we're going to look for these things." It's really hard to raise money that way because people like that you've identified properties and that they're going to be investing and diversifying their risk in this portfolio of properties. They really seem to like that model a lot.

Chris Pomerleau:

They do. A lot. We're trying. We're going to try the open fund concept.

Kim Lisa Taylor:

All right. What about current market conditions and interest rates and all that? Does that put a damper on deal flow or what are you seeing?

Chris Pomerleau:

We're busier than we were last year. I think there's three really great ways to find deals right now. If you're lucky and you find that unicorn seller who understands that the market's changed, then maybe you can buy it. I mean, we bought something recently where it appraised for $1.4 million more than we even had under contract for, and it's because that seller just needed to offload it, and they understand that it's not the same type of environment. So, keep that up. Try to keep them coming down to your price.

But, another thing we're doing a lot of is seller financing. A lot of times I'll say, "Look, seller, you say it's worth $10 million. Maybe it was two years ago, but it's not worth $10 million. If you won't accept my $7 million offer, will you sell it to me at nine and a half, but will you give me a $2 million seller carry? Maybe I can pay you 5% interest only for five or six years." Like you spoke about earlier, that acts as a little pref piece, but it helps our investors because now we have to raise less, which means all of our investors immediately have more equity.

I mean, I've told this story before where we had a 77-unit up in Sioux Falls, South Dakota, where the raise was $1.5 million, but we were able to get a $500,000 seller carry. A $100,000 investor, we only had to raise a million dollars now. A $100,000 investor, if we had to raise 1.5 million, they'd have 6.6% of the overall equity. But now that we only had to raise a million dollars, now they have 10%. That was a great benefit to them, but it also helped the seller. That's the second way we're finding deals, is a lot of seller carries. Our fifth portfolio syndication that you helped us just close here recently, all three properties had seller financing as part of their option, which was huge.

Then the third way is assuming the loan. Which, we're really excited we're assuming a 2.62% HUD loan here up in Sioux Falls, I mean, for the next 34 years.

Kim Lisa Taylor:

Great.

Chris Pomerleau:

That's really exciting. There are still ways to find deals. You just have to be a little more flexible.

Kim Lisa Taylor:

That's great. I think that's a great strategy of like, "Hey, if we can't come to terms on what we think is fair price right now, all right, we'll give you a deferred compensation." And in some installment payments, which actually helps the seller because then they don't pay taxes on the full amount.

Chris Pomerleau:

That's right.

Kim Lisa Taylor:

They can delegate that out over time. What are you looking for right now? Are you looking for investors, you're looking for properties? What's your current business model?

Chris Pomerleau:

Well, we're always looking for properties, but we have a great deal flow. This business — and then I have a hard money business —it was built off of investors. We are raising and having that conversation every day. Luckily, over the last four and a half years, we've raised close to $65 million, and that's great. We wouldn't be where we are without that ability. Every day, all day, we would always love the opportunity to talk to new investors.

I'm really excited about another deal we have going. We started a Regulation A offering, actually. We teamed up with some guys who had a background in solar implementation. 

It's really exciting. The name of that company is Raven. The reason I like it is that it offers a 10% IRR to all the investors, which I understand in some of the syndication worlds that's relatively low. But the purpose of this Reg A is that you can get in whether you're accredited or non-accredited at as low as $250. In essence, that $60,000 employee who can't typically afford our $50,000 minimum for all our syndications, they still have the ability to put some of their money in, maybe a thousand dollars, into real estate, earn 10%, it's a note, and also help with the installation of solar, and water conservation, and some affordability concepts. I'm really excited about that.

The business of LeavenWealth is running very well, but I'm really excited to offer this Raven opportunity because it allows a lot of people to get into real estate and/or make money from real estate that traditionally haven't had a chance to.

Kim Lisa Taylor:

For those of you that don't understand Reg A, just a quick little primer: it's a public offering. Because they've gone through the public approval process, registration process with the SEC, they can offer this to anybody without regard to their financial qualifications. That's why anybody can invest and some small amounts are acceptable. How would people find out about your Raven fund?

Chris Pomerleau:

The website's www.joinraven.com. We actually have a podcast that accompanies this offering called “The Climate Rebels.” Join Raven is also our handle on all the social media. I just think it's a really, really good opportunity.

Don't get me wrong, we have plenty of investors. Gosh, I have a friend from college who randomly saw me on TikTok write a $3 million check a few months ago. He didn't put it in Raven, but there are some people that don't get a chance to get into these deals. And if they want to get into... I mean, you can't find a 10% CD anywhere. So, it's a good opportunity. So, join Raven any way possible. I suggest that.

Then, the final thing I'm really excited about is in a couple of months we are launching a coaching platform. The name of that's Multifamily Wealth Nation. I'm really excited about that. I think coaches are huge. I myself have paid for some coaches. After those videos I watched, I hired a guy named Trevor McGregor. He worked with Anthony Robbins. He was more of a life coach, if you will. But, I'm a huge supporter of these things because people get a chance to learn from mistakes that we've made. And/or when they're watching a podcast like yours, Kim, this is huge. These kind of things are how I learned to do it. Multifamily Wealth Nation, we're excited to launch that in a couple months.

Kim Lisa Taylor:

That's really exciting stuff. You also mentioned that you have a hard money fund. Tell us about that.

Chris Pomerleau:

Gosh, that's really done well, especially with how bad the economy is with the banks tightening up. We lend money to real estate investors. We lend on the asset. We don't do credit pulls. We don't do credit checks. We don't ask for your PFS, or your personal financial statement. Our rule of thumb basically is that we're not going to lend on an asset unless we ourselves would want to own it.

Of course, we're not trying to own it. We're not predatory. But it's nice to know that if a borrower fails to make their payments that we know what to do with the asset. But ultimately, the name of the company's Liquid Lending Solutions. We've lent out over $50 million now. Right now, we currently have $17 million lent out. Again, that business is built off of investors.

Out of the $17 million we have lent out right now, $3 million is from the bank. They trust our concept. That's a line of credit from the bank. But $14 million is from investors, and they're receiving 8, 9, or 10% every single month. That's annualized. But they like that payment because our syndications are ... I'm sorry, our real estates are quarterly, and it's dependent upon how the asset is performing. But this Liquid Lending Solutions, this is just ... It's a note to us. We owe you that 8, 9, or 10% every single month. I'm really excited about that because investors get a chance to make some money, and we can help investors on the borrowing side go out and flip two units, one unit, four units. We have someone who bought a 70-unit recently. So, it's really exciting.

Kim Lisa Taylor:

That is very exciting. Wow. You've got your fingers in a lot of different pots, but it's taken time, and I applaud you for doing that.

Chris Pomerleau:

Appreciate it.

Kim Lisa Taylor:

I know a lot of people that are going to listen to this podcast that are going to say, "I want to be Chris." Y'all need to join his coaching program.

Chris Pomerleau:

Yeah, that'd be great.

Kim Lisa Taylor:

Chris, how can people get ahold of you or learn more about some of your funds, some of your investment opportunities, or maybe bring you some deals, or learn about your coaching program? 

Chris Pomerleau:

My email's chris@leavennwealth.com. That's Leaven — spelled like heaven — wealth.com. You can find me on any of the social media platforms, TikTok, Instagram, Facebook is huge. Then, of course leavenwealth.com. You can find me at any of those.

I love connecting. I love talking about real estate. A lot of times, even if I can't answer your question and/or if it's not my area of expertise, I've built the relationships throughout the years to perhaps know where to send you. So, I'm happy to help out in that way as well.

Kim Lisa Taylor:

Chris is just a generally all-around nice guy, so don't be afraid to reach out to him. He's definitely personable. I'll have to say, Chris, were you the original capital raiser for your syndicates?

Chris Pomerleau:

I was.

Kim Lisa Taylor:

Just look at how Chris portrays himself. He's very clear spoken. He's likable. He's personable. He seems trustworthy. That's what you need to strive to do. If you want to be raising money, you need to be likable, trustworthy, competent. I think Chris has all of that down. If you don't feel confident that you have that yet, you can get that with knowledge. The more knowledge you have about syndication and about what you're doing, about the rules, the more confident you're going to be in portraying that to investors, and you're going to be able to be more like Chris. So, anyway.

Chris Pomerleau:

I appreciate the kind words.

Kim Lisa Taylor:

It looks like we have a couple of questions. If you'd like to either raise your hand or put a question in the Q&A, we're happy to answer your questions, either me or Chris. You can ask us anything you want. We're super happy that everybody showed up on the call today. Just if you want to have a one-on-one call with us, please go to syndicationattorneys.com. You'll see a place to schedule an appointment. You can schedule an appointment with one of our staff or even with me and we would be happy to talk to you. Our staff is growing. We're bringing on a couple more people. We may be starting to offer some new services here shortly, so just stay tuned with us.

Also, if you're not already subscribed to our “Raise Private Money Legally” podcast, please do that. But more importantly, read this book. If you want to get big in this business, you need this book on your shelf. It's a reference material. You can read it, you can understand every different type of way that you can raise money for real estate from private investors. It's going to teach you the rules. It's going to teach you the structures. It's going to teach you how to split money with investors, how to figure out your splits. All that information is in this book, so you really need to get it. It's a No. 1 bestseller on Amazon.

My other book is still out there. If you're really new and you want a more of a how-to, step-by-step guide, you can get my other book, too. It's called “How to Legally Raise Private Money.” I encourage you to get all those books. If you want, you can get “How to Legally Raise Private Money” at our syndicationattorneys.com website. You can download the digital version of it for free. Just go to syndication attorneys.com. 

Chris asked, "What does Class B shares mean?" You want to explain that, Chris?

Chris Pomerleau:

Yeah, I'm happy to. I think it's pretty common to do it this way. You can name it whatever you want to. But, our Class A shares, we have designated as our limited partners, the passive investors. That's the $100,000 investor from down in Oklahoma who I've spoken with on the phone who is an electrician and just wants to give me the money and trust me to perform. That's the Class A investor. It, by far, makes up the majority of ... Well, that's our capital raise, right? That's the 70% of the ownership we were talking about earlier.

What we've designated as our Class B share are the individuals that partake in the waterfall or the promote, meaning ... Traditionally, for us, that means, obviously, anybody on the general partnership — so me and my partner, maybe one or two other people who are making the day-in, day-out decisions, the active investors — we are the sponsors of the deal. You've also heard we are the ones helping you do this.

Now, of course, Kim can come in at the end and fine tune any of my descriptions. But I can tell you we have called it Class B meaning the Class B people make money at points in the waterfall above and beyond the pref. Our deals are structured like this. We structure all Class A members, anybody who puts money in, they get a 7% preferred return. That means a $100,000 investor, if the property performs at a 7% that year, he or she will get $7,000. That's what that preferred return means.

The way we've structured it, from the guidance of Kim — which I'm really glad that we've done this —  is we also have it be cumulative. Meaning if that investor only made 6% year one and then the second year the property made 8%, we give all 8% to the Class A member because they need to be brought whole to the 7%. It's not a guarantee. You can't guarantee these things, but it helps the investor feel comfortable that they know that there's always that 7% preferred return lingering around so that they get paid first before we get paid, which that's how it should be.

The Class B members get paid after we've gone past the 7% preferred returns. Anybody who's going to partake in that 70/30 split, or 80/20, or whatever you want to do, that 20% or that 30%, that's where the Class B members get to make some money because they make anything over the preferred return. It's traditionally the sponsors or the general partners, but sometimes you have some relatively large capital raisers and/or maybe someone who brought a deal off-market. That's how we've structured our deals. None of that was legal advice. I'll let you book a call with Kim later if you want some more legal advice.

Kim Lisa Taylor:

I mean, that was a really great explanation, Chris. Just to put it in the context of the whole structure of a real estate syndicate, in a typical syndicate, you're going to have an investor-level entity. If you're only buying one property, that entity is usually going to also take title to the property. It's going to sell off a portion of its ownership interests to investors, those are the Class A members, and you're going to reserve a portion of the ownership interest in that entity for the management class. These are the people that are contributing services. Those are the Class B members. It's usually the members of the manager, but it could include some other people that are providing some other non-capital contributions or services to your company. That's Class A and Class B.

Chris alluded to this during the call. Class A can sometimes be divided into subclasses where maybe certain Class A members just get a fixed return and then the other Class A members get a share of profits. you can have Class A-1 or Class A-2, or you might use these subclasses based on how much somebody invests. Somebody who invests more gets a higher preferred return and somebody who invests less gets a lower preferred return. There's all different ways that we can use subclasses within Class A, but Class A is always the investor class.

If you invest in your own deals, you buy Class A interest right alongside your other investors, you get the same return those investors get on their money. Class B, we just have you pay a thousand dollars total for whatever portion of that company. Usually going to be 25, 30%. I've seen it as low as 20%. 20, 30% is what we're seeing a lot of now. You're going to keep for the management team, you're going to pay collectively a thousand dollars for those interests. That's so you can establish a cost basis so that later on, if the property is sold and there's capital gains taxes, you're going to have a cost basis to be able to calculate what your capital gain was on the amount you get in the end so that you pay that lower interest rate on that.

Additionally, we talked about this a little bit during the call, the management entity. Using the terms here synonymously general partner, GP, and manager. In an LLC, you have a manager and you have members. In a limited partnership, you have a general partner and you have limited partners. They actually serve the same roles, but we typically use LLCs, not limited partnerships. Everybody used to use limited partnerships, but LLCs are the latest thing. That LLC that we're creating to sell off the interest to investors, take title to the property, that is going to be manager-managed. The manager itself is going to be a separate LLC. That's where the management team resides. That's you, that's Chris, and Collin, and any other partner level people that he has who are actively involved in running these syndicates, finding the deals, underwriting the deals, helping to co-guarantee the loans, raising the money. Those are the people that are usually going to be involved in the management.

The management earns fees, certain fees, acquisition fees, asset management fees, refinance fees, disposition fees. Those are very common. If you're doing a heavy rebuild or a development project, there'll be some construction management fees. You're going to earn fees, but the fees aren't really where you earn your wealth. The fees are just keeping you alive. It's keeping you from starving, because it can be a really long time before you get to that point where Class B gets its share of the profits, as Chris described, because you might have to give all the money to the Class A members to get them their preferred returns, especially in the early years when you own those properties when the returns are a little lean, you're improving the property, you're raising the rents, you're increasing the value, and it might take two or three years before you get to a point where there's some money left over, some profits from cash flow to split between Class A and Class B.

I hope that, Chris D, helps you, and it helps everybody else on the call understand. That was a really great question. We appreciate it very much.

All right. We've got another one here. "If a person has a closed group that you must be invited to join and/or you pay to be a part of that group, can you talk about a 506(b) in that group?" That's another great question. Thank you. Thank you for that, Cedric.

Well, the rule is that you have to pre-vet all of your investors before you can tell them about specific investment opportunities. That means you have to have had a one-on-one conversation with those investors to understand whether they are accredited. If they're not accredited, how are they sophisticated? That's got to be more than somebody with just some savings and a job. And you need to talk to them about your investment horizons, how long are you going to be holding onto the properties and holding onto their money, what kind of general returns you're looking to offer. Is that going to fit within their needs, and what they're looking for, and is it suitable for them? That's called a suitability conversation. There is a chapter about that in the book about how to create a substantive relationship. You have to be able to demonstrate that you had a substantive relationship with all those investors before you made an offer to them and talked to them about your deal.

What's really disturbing is I just talked to a broker dealer recently who got fined by FINRA because they actually were going through this vetting process, but they were doing the vetting process and then offering deals that preexisted the vetting process. They got fined by FINRA because the deals predated the vetting process. What FINRA said to them was, "You have to have the relationship before the deal exists. You've got to go out. You've got to pre-vet these deals."

Back to your question, Cedric, no, you can't do that if you're going to do 506(b) offerings. Unless you've had a call, a suitability conversation with every single person that's on that call, you cannot talk about your group. Or your deal. You can talk about your company in general, just like Chris is doing today. "Hey, we're always looking for deals. We love to meet new investors. Let's have a conversation and figure out if it's a good fit. Then, later on, we might be able to offer you a deal when we have something in the future." Always in the future. That's what you want to be doing at that closed group. So, don't pitch deals if you're going to do 506(b).

If you're going to do 506(c) deals that you can advertise, then you could advertise them within that closed group. You can advertise a 506(c) deal to everyone. You don't have to pre-vet them. You can only allow verified accredited investors to invest in those deals. That's it. 

Tell us, Chris, are you doing 506(c) deals or are you still doing 506(b) deals?

Chris Pomerleau:

For the most part, we're doing 506(c) deals now. It's just easier for us. But, I mean, gosh, with the 700 contacts and investors that we have, I can now blanket send out our next offering opportunities ... We actually have one coming up I'm really excited about. We're saving in our back pocket the time to pull the 506(b) card, if you will, because for us the raise is relatively low. That way, I have some friends or family, or just phone calls I've had in the past during the suitability call where they're in our CRM of not being accredited, but I'll know that, look, they want to invest, they can invest, they're financially comfortable to invest, they're just not accredited right now. Now's the time to pull the 506(b) card because we only have to raise a small amount of money. For the most part it's 506(c), but we do a little 506(b), too.

Kim Lisa Taylor:

What that allows Chris to do is he can advertise all of his deals. And during the process, he's running across people that are not verified accredited investors. He's not just saying, "Oh, well, sorry. You can't invest in this deal. I don't want to talk to you." He's saying, "Hey, let's get to know you. I don't have anything for you right now, but we might do a 506(b) in the future. So if we can have that suitability conversation right now, we can get you in our database so that we'll be able to tell you about those opportunities when they happen."

Chris Pomerleau:

Exactly.

Kim Lisa Taylor:

That's exactly how you need to do it. You can't run a concurrent 506(b) and 506(c) deal. Because if you met anybody through advertising of your 506(c) and then you said, "Oh, well, I can't put you in this one, but I got this other one," you still met them through advertising, and that's not allowed for 506(b). You can't do a bait-and-switch like that. You really have to run them consecutively so that you make the relationship, have the suitability conversation. You have to have a recordkeeping system so that you can document when you have that suitability conversation. And after that, then you are allowed to make them offers. Hey, Scott, I think we answered your question about Class B shares. Thanks for asking it.

Nate asks, "What is your recommended resource to guide a move from single-family flipping to multifamily? I'll let you answer it first, Chris, and then I've got some ideas about that, too.

Chris Pomerleau:

Well, you had said single-family flipping to multifamily. I would imagine you're not talking about multifamily flipping, but if you're ... I don't know if it would necessarily matter. When I say flipping, I mean your business plan is to buy an underperforming 40-unit and then fix it up, value added, if you will, and sell it three years later. I don't necessarily know if it's different whether you sell it or keep it.

But, you had asked for a resource about how to start teaching yourself to do these things. Again, I sincerely mean this. I said it really very early on in this call that the biggest learning curve for me, even as an attorney, was making sure I was doing the syndication, logistic things correctly.

That's a huge testament to Kim and her team, and I'm not just fluffing her pillow because I’m on her podcast. I send people her way all the time. I think out of the 20 syndications we've done, I think Kim's team's done 17 of our deals. It's how I've gotten a chance to learn. Yes, these books help. Kim has a great website as well because there's a question-and-answer, a frequently-asked-questions section or articles you can read. Those will really help answer a lot of questions that I've visited myself even after I had been going on for a few years.

Some podcasts maybe. It depends on what you're trying to learn. I know (Joe) Fairless' book is written as if... Well, I think he literally wrote it. I don't know if that's accurate or not, but I can tell you it's written like somebody would speak. I respect that. After law school and all these other extremely dense textbooks, I can tell you it's nice to just hear it in a little more conversational speak. I think that's a good way to learn the syndication process.

But, I think Kim could probably give a couple ideas here. I can tell you that you'll be surprised on how similar they really, really are. But YouTube, the Fairless book helps. Jake & Gino have some good books out, and then I'm guessing Kim has some good sources, too.

Kim Lisa Taylor:

Well, there's three or four different real estate trainers that I do some co-teaching for. RE Mentor is one of them. They have a Multifamily Millions bootcamp that I highly recommend everybody go to if you're interested in learning multifamily. I went to it and was in their coaching program a long time ago. Not going to say when. But, I was just blown away by the amount of information I learned about what to buy, what not to buy, where to buy things, how to know if a deal is good enough, how to underwrite, how to figure out if the deal was good enough to be able to share it with investors. It was three days of just cram all that stuff in your brain, and I felt like that was a big, big jumpstart.

I think Jake & Gino may have something similar. So, RE Mentor, Jake & Gino. Vinney Chopra, he's a former client. He syndicated 26 properties. He's got books out there. He's got a book called “Syndication Made Easy.” He's also got tremendous resources on his website and coaching programs, things like that.

The one thing I will say about making a transition from single-family flipping to multifamily is if you've been using private lenders to finance your single-family flips, they will not convert into equity investors in your multifamily deals. I have seen people try to do that again and again. They get used to having a promissory note filed against a specific property, and they don't want to change that method. You may be able to transition them into a fixed return class where they're used to getting the monthly checks and they're willing to do that, but they still really want that promissory note and the lenders won't allow you to have subordinate debt. 

Ever since Dodd-Frank passed, lenders have prohibited subordinate debt, so you're not ever going to be able to have a secondary lender. You're going to have to figure out a way to get it into your LLC and make a special class that has the same rights as if they had a promissory note.

Lender doesn't want somebody to have foreclosure rights on a property that they've put money into because they end up ... If you have a second position loan and you stop paying on that first, then that lender can foreclose and become the owner of the property, and now the first position lender is in a precarious position because they don't have a contract with that person and it becomes more difficult for them to deal with the loan if they have to foreclose. That's why they disallow it.

Chris Pomerleau:

Shameless plug, too. The question was ... It tells you how good I am at selling. I appreciate the kind words you've said earlier about me being kind. I sincerely feel as though the reason I was able to raise a lot of money is, truly, I promise you, maybe sometimes to a fault, I'm overly truthful and organic in what I say. I really am. But, I'm not a salesman.

What I could have told you earlier, the best source, coaching. I'm not just saying that because we're launching a coaching platform, I promise you we're not even ready right now. We're not going to open for about two months. But if I could do it over again, I would've gotten a coach in 2013, hands down. Because everything I learned, I had to teach myself. Sometimes I learned it from YouTube. Sometimes I learned it from Audible. Sometimes I learned it because I failed at first and I'd learned what not to do again. But if I would've had a coach guiding me, I just ... I know my drive, and I think we would have been more successful quicker.

It doesn't have to be our group. It can be anybody else. You said Vinney's got it. Jake & Gino's good. I think you need to make sure you grab a coach and hire a coach that's actually done it. If you want to really succeed and excel quickly, that's the fastest way, hands down.

Kim Lisa Taylor:

Absolutely. I've seen that happen again and again. The people that have gone big and have done it fairly quickly have started with a coach and kept the coach for their first two or three deals. It's really kept them on track and kept them from looking at the wrong things.

Just an example, I get people all the. .. We are running a little long today. So if any of you have to leave, we appreciate that. I understand it. But, I think this is such valuable information for everybody. If you've got the time, Chris, we'd love to keep answering these questions.

Chris Pomerleau:

Yeah, that's fine.

Kim Lisa Taylor:

Having the coach can keep you from going astray, otherwise you're chasing the next shiny object. I had a woman call me once saying, "Hey, I've got a ski resort under contract," and she was brand new to multifamily investing. It's like, "Well, how much money do you have invested in that right now? Because unless you've got a ski resort operator on your team, you better get away from that deal before you lose a lot more money because you're never going to be successful doing that on your first deal." You got to stay in your lane, and sometimes people have to remind you that kind of brutally. Stay in your lane, get really good at that, and then branch out.

Chris didn't start all three of his businesses all at the same time. He started one, he got good, he scaled up, and then he started something else. That's really the way that you've got to approach this. And if you don't, you're going to end up floundering around and maybe not get anything done. Thanks for that question.

Kevin asks, "I saw a deal where they took 506(b) investors first and then 506(c) investors. But after they took 506(c) investors, they no longer took 506(b) investors. Why?"

That's because you can convert from a 506(b) to a 506(c) offering. Here's the key for that though. You have to stop raising money for 30 days from the last 506(b) investor that you took to the first 506(c) investor that you take. You don't have time to do that when you're trying to close on a multifamily property in 90 days, so don't count on that as your investment strategy.

If you have a fund, and you start out with family and friends, and you get a couple million dollars, you want to raise $5 million or $10 million, and you get to a stopping point because you got all your family and friends invested, now you need to start advertising, that's where you could use that strategy and you could convert from a 506(b) to a 506(c). You have to have that 30-day gap. That's why you can't go back. Once you do that, you're a 506(c) only from that point on because you're starting to advertise your offering. You can no longer bring in 506(b) investors because you're not allowed to advertise for 506(b) offerings. 506(b) offerings do not allow general advertising or solicitation, but they do allow you to bring in non-accredited but sophisticated investors. That's the distinction. 506(c), you can only bring in verified accredited investors. Once you start advertising, you're stuck on that road. That's the answer to that one.

Scott asks, "How important is it to utilize a brand name to reach investors? And did you use this technique?" Chris?

Chris Pomerleau:

The name of our company, our brand, I think it's important because luckily, especially if you have a team, they may only meet one member of your team, but they know that that member is a part of this company. They know they met Collin. He's a part of LeavenWealth.

I think we got started based ... I know we got started based off personal relationships, so a lot of times they knew Chris or they knew Collin, and the name of our company wasn't as important. But because we wanted to grow, building the positive outlook and environment that surrounded our company name, I think it was really, really big. And now, when I'm having conversations with some institutional money looking to write very large checks and whatnot, we have big investment decks, pretty pictures and colors with our name everywhere, and it just cements how you look to the world and makes it more professional. It makes it a lot more professional than Jim wants some money from you because Jim likes apartments.

Kim Lisa Taylor:

Well, that and having an email that's other than an @gmail.com address is kind of…

Chris Pomerleau:

That drives me nuts. I don't mean to say that against anybody. I have some good friends who still do it. But if you start talking about million-dollar type items and your email is @yahoo, MSN, Hotmail, I'm not saying that's bad, but there are many people who might look at it and say, "I don't know. I don't know."

Kim Lisa Taylor:

Once you establish a brand, your brand is ubiquitous across everything that you do. Like Chris said, you should be using the same fonts, themes, colors. Everything should look the same. Think about Nike. Think about Apple. Think about how they've branded their companies, and that's what you need to be doing.

I keep plugging my book, but there is a chapter on how to name the entities and how to brand your companies. But, branding is a little bit of an art. You need to first do a Google search. If you're thinking of a name, do a Google search. Find out if there's somebody else out there. I had some clients that decided on this one name, and they were stuck on this name. They said, "It's available in Wyoming. We're going to get it, and we're going to brand our company." I did a Google search, and there was a $5 billion hedge fund that was using the same name. I suggested that they change their name so they didn't get squished like a bug. Because you're going to spend all this money, and time, and effort branding your company, and then that company is going to send you a cease and desist letter and they got more money than you. They win, you don't. You have to start over.

So, do a Google search. Find out if something is confusingly similar. You don't want their investors calling you. You don't want your investors calling them. Also, then you look in the state where you want to form it. Well, then you actually look on GoDaddy or some other hosting site and find out if the domain is available. If the domain's not available, don't use that name. Anything with the word capital in it is highly, highly overrated, overused. Try to think about using different words besides capital, partners, investments, investors, something besides the word capital in your name and see if you can get the domain.

Once you own the domain, you kind of have the same thing as a trademark. It's easy to keep people away from your space by getting alternate domains that are around that. I own syndication attorneys, syndication attorney, syndication lawyers, syndication lawyers. I keep people out of my space because I buy multiple domains to keep people from trying to build their business off my name. Think about all that. But, we're happy to have a consultation with you about that.

We also have a division that does professional marketing materials for people. We have professional editors, graphic designers that can help you with your branding and create pitch decks for you that you can explain your business to your investors without running afoul of securities laws. We're happy to talk to you about all that stuff.

Lavonne asks, "What is the marker for the start of a deal?" I think what you're saying is when ... We file a Form D with the SEC and establishing a start date for when you can start offering that deal to investors. The real thing is it's not when you get an LOI, because that deal could still go away. You might never get to a purchase agreement. You might not get through due diligence. It's certainly by the time you've hired us to start drafting your securities offering documents, that's going to be the start of the deal because that's when your deal is current or contemplated.

And we recommend you don't hire us until you have a signed purchase agreement, someone from your team has physically visited the site, and you've reviewed the financials. Once you get those three things out of the way, we've learned that our clients are 85% likely to close on their deals. That's the time to hire us, get us drafting the docs while you conduct the rest of your due diligence. From the point you hire us, we're drafting docs. It's a contemplated deal. You cannot continue to meet 506(b) investors after that point. You can meet them prior to that point. Hey, Chris, what CRM are you using?

Chris Pomerleau:

Our portal is Juniper Square.

Kim Lisa Taylor:

Juniper Square. Didn't you start with somebody else?

Chris Pomerleau:

We started with Syndication Pro, which to anybody just starting off, it does everything you would most likely want. It's intuitive. They're user-friendly. Their service is great. We used it for the first three years. Juniper Square just ... Gosh, a friend explained to me SyndicationPro, and I hate saying this because they're great people, but it's a Toyota. You can count on it. It's reliable. It's exactly what you want. Juniper Square is kind of the Mercedes. To be honest, we probably don't even use 60% of the site because it's so in-depth what it can do. But, either of those is great.

Kim Lisa Taylor:

It's great to start out with the SyndicationPro or Cash Flow Portal. We have some investors that love InvestNext. Those are your starter ones. Once you get into the big time when you're a big important syndicator like Chris, then you might graduate up into AppFolio or Juniper Square, one of the more expensive ones.

But, I don't recommend that you actually engage in any of these until you've got one or two deals. Because your first deal, you might only have 10 investors. You can keep track of them on a spreadsheet. Once you get to where you've got multiple deals, and you've got different investors, and different deals, and different partners, and different deals, things like that, that's when you might want to start investing in one of these CRMs to start keeping track of everything.

Chris Pomerleau:

For sure. For sure.

Kim Lisa Taylor:

Let's see. Anyway, I think we have run through the questions. Cedric just wanted clarification. "After the 506(b), you have to wait 30 days before you begin raising our advertising again?" Yes. During that 30-day time period, you're going to be redrafting your documents so they now say that if this is a 506(c) offering, going to be refiling with the SEC saying this is a 506(c) offering.

Here's the problem. If you don't wait the 30 days, then the SEC will consider the two 506(c) and the 506(b) offerings to be integrated, all one and the same, and you're not compliant with either one of them because you're now advertising, and that doesn't comply with 506(b) rules, so they're going to say you didn't follow the rules. You lose your exemption, and the whole thing starts to go downhill. You don't want to go down that road.

I know there's some attorneys out there that are claiming that this is the panacea, but I happen to think it's a little too complicated. If you have a fund, yes, you have time for that. If you have a deal under contract, you do not have time for that.

All right. We ran through all the questions. We ran a little late, but love that everybody stayed on the call. Chris, you've been a fantastic guest, and you're a fantastic client. Thank you so much for imparting all your wisdom. If I was looking for a coaching program, I think I'd want to learn from Chris, so you guys all need to reach out to him if you're interested. We look forward to seeing you on our next podcast.

Chris Pomerleau:

Thank you.

Kim Lisa Taylor:

Thank you.