That’s why I decided to comment on this article. However, since the last time I disagreed with a blogger I got deleted and ignored (I should have known better, since this blog-that-I-better-not-mention has been around for a while and still looks pristine and comment-free), I decided to get my time’s worth and also write something on our own GroundBreaker blog, where no one can censor me.
The author of the post above is dead wrong when it comes to the law (his third point). A member-managed LLC interest is a “security” and its offering requires either an exemption or registration. Direct real estate investments usually meet exemptions that pertain to the Investment Advisers’ and the Investment Company Acts, but the ’33 Act registration issues are still there. It would be well beyond the scope of a short blog post to go over all the exemptions and the interplay of all these rules (and, trust me, I would bore you to tears if I even tried), but I thought I would correct this point for readers.
The bottom line is: be mindful of these issues when raising funds, especially by public means, talk to an experienced securities lawyer, and partner with a platform that has the know-how.