Cash Flow vs. Appreciation: Understanding Reg D Syndication Investor Types

In the investment world, two primary types of investors emerge – those who focus on cash flow and those who prioritize appreciation. Understanding these two types of investors is crucial for anyone looking to make sound investment choices or raise capital for their ventures. This content delves into how these two types of investors differ in their goals and strategies.

For cash flow investors, the main goal is to receive a regular income from their investments. They might be retirees who rely on this income for their daily expenses or investors who use the cash flow to fund other investments. This strategy is all about maintaining a steady income stream.

On the other hand, appreciation investors prioritize long-term growth. They are less interested in regular payouts and more interested in seeing their investments increase in value over time. These investors often have a regular income source and use their investments to grow their wealth, avoiding regular taxation.

Understanding the goals and strategies of these two types of investors is crucial when raising capital for your business or investment venture. It shapes the way you communicate and pitch your investment opportunities. So whether you're an investor yourself or looking to raise capital, this knowledge can guide your decisions and make you more effective in your financial endeavors.

Read more about Reg D Rule 506b - Rule 506b of Reg D: Non-Accredited Investors & No Solicitation: https://www.moschettilaw.com/rule-506b-of-reg-d/

Read more about Reg D Rule 506c - Rule 506c of Reg D – Solicitation & No Non-Accredited Investors: https://www.moschettilaw.com/rule-506c-of-reg-d/

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Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, as well as private equity firms. Our attorney, Tilden Moschetti, is determined to keep the firm’s ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory churning out private placement memorandums or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers with Tilden Moschetti without making you book an official appointment or get passed along to associates or paralegals. We’ll work with your ambitions and overall vision to help you close the current deal and fill in that ‘missing’ piece – whatever you need – to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).

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What is Syndication Law & The Private Placement Memorandum Attorney?

Tilden Moschetti, Esq is a private placement memorandum attorney and a syndication lawyer. He has helped syndicators put together Regulation D offerings for their real estate syndications, business capital raises, and funding private equity firms.

There are two kinds of investors
in the world. And how you put

your founder investment theory
together is going to be geared

towards one or the other. We are
going to talk about investors

who are interested in primarily
cashflow, and talk about

investors who are primarily
interested in appreciation.

One of the components of your
founder investment theory, that

theory of yours that you're
putting behind your investments

and portraying it as a story to
your investors or your potential

investors, one of those
components is how it's suitable

for them. See you there are
different kinds of investors out

there, there are investors who
are really primarily interested

in cash flow, when you have
interest, you have investors

that are primarily interested in
appreciation. So let's talk

about cash flow investors first.
Now, cash flow investors, as the

name implies, are those
investors who are really

interested in a monthly or
quarterly check in the mail

mailbox money as it were, they
are they tend to be a group that

either is relying on that income
to be coming in at a regular

interval, or they're relying on
it, because they plan on

siphoning it off to other
investments over a period of

time. So they're, they're going
to be doing taking this pool of

money, and then just keep
compounding it into other

investments, rather than your
specific investment, right. So

they may be getting that check
in the mail, depositing it, and

then putting it towards this
other syndication or this other

stock or this bond, or whatever
it is. So those tend to be your

cash flow investors. Now, in
general, and this is extremely

broad, so don't take it with a
grain of salt. And it's also not

investment advice. For anybody
who is listening to this video

who is looking for investment
advice. This isn't investment

advice. So that cash flow
investor tends to be your

retired person because they
don't have a steady income

coming in. So they don't aren't
rely. So they are relying on

that cash flow that's coming in.
Now, the other kind of investor

that is out there is the cat
investor who is primarily

looking for appreciation, so
they don't want to check now,

you may ask yourself, why don't
they want to check every month

or every quarter? Well, the big
reason is taxes. So they will be

people who probably have a good
paycheck and get, you know, get

paid regularly and aren't
relying on your investment for

that big for those that that
regular payment, what they are

looking for is sort of like
someplace to just keep putting

money away, where that will just
grow for them. And then they

don't have to pay taxes on it
while it's in the investment. So

a good example is a team of
doctors goes in invest into a an

office building. And then they
aren't really looking for any

kind of appreciation whatsoever.
They're looking just for Okay,

in the end of 15 years, or
whatever period, we're going to

sell this property and we're
going to enjoy all the profits

of it. Now, they are two totally
separate tracks. I personally I

fall into the appreciation
track, I make good money, I have

a regular, I earn regularly, I
don't need to be paying taxes on

my on a yearly thing, I'd much
rather be putting that money

away and watch it grow, right
and watch it and I have a

transaction that's turns into a
sale. And then suddenly now I've

got a nice bit of appreciation.
So if I'm not paying also, I'm

not paying at that regular tax
rate, I'm paying at that capital

gains rate, not the annual rate,
which is much higher. So that is

a basic picture of what those
two different types are. Now

there certainly is people and a
large number of people who want

both, and they exist in there
out there. The point of this

video really is not to say one
or the other or that your deal

should be one or the other
because they're all different.

Every deal is unique. It has its
unique fingerprints. But what is

critical for you to do is to
identify what kind of investment

it is because depending on what
it is, it's going to change how

you talk to your investors. If
it's a cash flowing investment,

you need to have that
conversation with them, or

they're going to turn off
instantly if they're an

appreciation person, and maybe
that's okay, because if all

they're looking for is just to
prove situation and cashflow

deal probably isn't right for
them, or vice versa for the

appreciation person, but the
person who really needs the

regular regular money coming in.
My name is Tilden Moschetti. I

am a syndication attorney with
the Moschetti Syndication Law

Group. Now what we do as we help
real estate, syndicators,

developers, private equity
funds, businesses, raise

capital, raise that money that
they need in order to put it

into their business, put it into
their syndication, whatever it

is, they're raising money for,
not only for the benefit of

their investors, but also for
the benefit of themselves. They

make money this way. So we
helped make that whole process

legal and compliant under the
SEC rules. Now if we can help

you stay compliant under Rule
506b or Rule 506c of Regulation

D. We'd love to talk with you
give us a call. Our link is at

the bottom of this. These notes.