How to Legally Raise Capital for Real Estate With Nic McGrue, Ep. 732

Nic McGrue is the founder of Polymath Legal PC, a boutique law firm focused on helping real estate investors lawfully raise capital through syndications. With over a decade of experience and licenses in California and Washington, Nic specializes in securities law and real estate partnerships. He’s also a tenured business law professor who brings both legal and practical insight to every client, helping them raise money legally while protecting themselves and their investors.

 

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Key Takeaways

• If you’re raising capital from passive investors, you’re selling securities—understanding exemptions like Reg D (506b/506c) is critical.

• Regulation D allows unlimited capital raising and is more practical and economical than Reg A or going public.

• The PPM (Private Placement Memorandum) isn’t just for disclosure—it’s also legal protection for both syndicators and investors.

• Disclose every risk that could impact a deal—even if it sounds scary. Transparency builds trust and legal protection.

• When things go wrong, consistent communication with investors can reduce legal risks and preserve relationships.

 

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Topics

How to Legally Raise Capital for Real Estate

• Most syndicators use Regulation D exemptions to avoid the complexity of going public.

• Reg D has two primary options: 506(c) for accredited investors with general solicitation, and 506(b) for known investors including up to 35 sophisticated but unaccredited individuals.

• Knowing which exemption to use depends on your network, capital goals, and communication strategy.

Understanding the PPM and Why It Matters

• The PPM outlines who you are, what the deal is, and what could go wrong.

• Disclosing all risks protects the issuer—lack of disclosure can trigger SEC scrutiny and lawsuits.

• If the document sounds “too safe,” that’s a red flag. A realistic PPM should include worst-case scenarios.

What to Do When a Deal Goes Sideways

• Communicate early and often. Most lawsuits stem from silence—not poor performance.

• Call investors before sending bad news in writing. Set expectations before outcomes shift.

• When necessary, hire litigation counsel, but don’t wait to start investor conversations.

Best Practices for Operator Partnerships

• Vet your potential partners: are they filling a true strategic role or just a task you could outsource?

• Build detailed operating agreements like prenuptial contracts—define roles, expectations, equity, and exit plans.

• Align on contributions, decision-making, and conflict resolution before launching your business together.

 

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Make sure to download our free guide, 7 Questions Every Passive Investor Should Ask, here.

 

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Round of Insights

Failure that set Nic up for success: After graduating law school in 2009, Nic lost a job offer due to the recession. That setback led him to launch his firm earlier than expected—an unplanned move that shaped his current success.

Digital or mobile resource: Notion – Used to track daily to-dos, long-term goals, team communication, and even household systems.

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