How to Legally Raise Capital for Real Estate With Nic McGrue, Ep. 732
Multifamily Insights
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.
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.
Make sure to download our free guide, 7 Questions Every Passive Investor Should Ask, here.
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.
Book recommendation: Limitless by Jim Kwik – A foundational read on breaking mental barriers and unleashing your full potential.
Daily habit: Meditation or walking as a form of mental reset—critical for slowing down and managing the chaos of entrepreneurship.
#1 insight for protecting yourself legally in real estate: Get a great attorney. Legal guidance is your first and best layer of protection.
Favorite restaurant in Inglewood, CA: Stuff I Eat.
Next Steps
Learn more at polymathlegal.com
Check out Nic’s previous episode on Multifamily Insights
If you’re raising capital, start with clarity: know your exemption, disclose all risks, and build investor trust from day one
Don’t skip the PPM or your operating agreement—they’re critical tools, not formalities
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