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How do you choose between doing
a Regulation D rule 506b offer

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versus a Regulation D rule 506.
C offer? Let's explore the

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differences and why you choose
one over the other?

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Probably the question I hear
more than any other is how do I

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choose between a Regulation D
rule 506b offer and doing a

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Regulation D rule 506c offer?
Those two are different? How do

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I do it? And so let's talk about
the differences. Regulation D

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rule 506b says you can raise an
unlimited amount of money from

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an unlimited amount of
accredited investors, just like

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Regulation D rule 506c,
unlimited amount of money,

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unlimited amount of accredited
investors, there's one

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difference between the two of
them. And it comes in two

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different choices. You've got to
choose either from taking

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accredited non accredited
investors. So you may have up to

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35 in any 90 day period, non
accredited investors under Rule

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506b, you don't get that choice
at all, under Rule 506c, you

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cannot have any non accredited
investors in rule 506.c. So why

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wouldn't you just choose a rule
506c? Well, it's simple. Because

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under Rule 506c, you can
advertise, see, under Rule 506b,

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you need to have a significant
relationship with everybody that

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you wouldn't have as an
investor. Because if you didn't

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advertise to them, how did you
get the money? Right? That's the

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question that has to be
answered. And it's answered kind

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of in the negative, right?
Because you don't know. Well, if

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if you didn't advertise? How
could How could you get the

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money? So that's why you have to
have a relationship, otherwise,

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there's no way you would have
ever found them to invest. So

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the choice between there? So the
real question, when I get asked,

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well, how do I choose? Which
one? The answer is simple? Where

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do you think your investors are
coming from? Do you know a lot

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of people who can invest in your
property, and you've talked with

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them and kind of gotten a gauge
of that, oh, there's no problem,

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I can raise $5 million from this
group of people. Now, it's not

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just friends and family, like
friends, like your best friends

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that you'd go drinking with.
It's really that you ever relate

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a substantive relationship, such
that your investors feel like

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they can pick up the phone and
ask you a question. And you feel

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like you have a general
understanding of the their level

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of sophistication. So that's the
definition of knowledge. But so

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you've got a pretty big sphere,
if you think about all the

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people that you know, you may
have a pretty big fear, and it

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may be possible for you to raise
all that 5 million. And if it is

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rule 506b is probably the best
choice, because you don't have

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to go through an additional step
that is under Rule 506c. And

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that's verification that they
are in fact accredited. You see,

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when you choose rule 506c, you
get all the benefits of getting

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to advertise. But you can't make
the mistake of assuming that

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somebody is coming into the
investment, just because you

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think they might be an
accredited investor. And they

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said that they're an accredited
investor, you actually need a

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third party to raise their hand
and said, I know this person.

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And yes, they are indeed an
accredited investor, I put my

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license on the line to say
that's true. So those people are

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the accredited investors under
Rule 506c, they have to be

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verified. That's why what I say
it's just easier to do a 506b if

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you actually already have that
relationship, because they're,

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whether they're whether they're
an accredited investor or not.

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It's really up to their self
selection. You just need to have

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a good faith belief that they
are in fact probably a good an

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accredited investor. If they say
they are. So 506b five succeed,

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look at your network and decide
well, where are these people

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coming from? Are they coming
from there? Or am I really going

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to need to advertise to meet
have people invest with me who I

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just don't know yet. And those
people eventually then you will

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know and you can include them as
part of a 506b. So I hope that

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helps. My name is Tilden
Moschetti. I am a syndication

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attorney with this Moschetti
syndication Law Group. We focus

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exclusively on Regulation D rule
506b and 506c offerings.