Agents Building Cashflow

EP 154: The Real Estate Crowdfunding Blueprint with Levi Brackman

• Levi Brackman

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Business-savvy executive and the Founder and CEO of Invown, an innovative equity crowdfunding platform, Levi Brackman, shares his journey from working at Priceline to founding Invown, driven by a vision to democratize real estate investing and financing through Regulation Crowdfunding (Reg CF). He explains how Invown helps sponsors and investors navigate the complexities of securities regulations to create accessible investment opportunities.

Levi's insights offer a valuable perspective on the potential of crowdfunding in real estate and beyond. Tune in to discover how Invown is transforming the investment landscape and how you can benefit from it.

Key takeaways to listen to:

  • Exploring the origins and mission of Invown.
  • Understanding the intricacies of Regulation Crowdfunding (Reg CF).
  • Navigating securities regulations with Levi's expert guidance.
  • Discovering the diverse investment opportunities on Invown.
  • Learning how to democratize real estate investing for everyone.

About Levi Brackman

Levi Brackman is an executive with degrees from SOAS (BA), UCL (MA), and the Australian Catholic University (PhD). His experience as a data scientist led to him building enterprise-level data and AI capabilities at multi-billion-dollar companies, and his mission now is to democratize access to institutional-grade investment opportunities.

Connect with Levi Brackman:

Get 10% discount on your offering 

To connect with Randal and learn more about passive investing, visit www.ridgelineig.com and follow our social media pages below!

[00:00:00] Levi Brackman: A lot of people who have audiences they want to solicit from, they might not be accredited, they still want them to be able to invest. That's what the Reg CF law is for and that's where people in invo and come from and we are usually And as far as I know, in other words, I haven't done there could be someone else just changed their prices recently But as far as I know, we're the most cost effective site or the cost effective company For people who want to do Reg CF offerings.

[00:00:26] Intro: If you're a real estate agent earning 200, 000 a year, and you want to grow your passive income, this show is for you learn secrets, other agents use, and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities. So you can take your commissions and turn them into cashflow.

[00:00:45] Intro: Here's your host, Randall. Let's dive in. 

[00:00:48] Randal Mcleaird: All right. Welcome back. I have a special guest on today. We're talking with Levi Brackman from Invown. Levi is a partner of the show. He's who we are using for our real estate [00:01:00] crowdfund offering that we have. So whenever you do a crowdfund, you have to have a platform that hosts your offering and Invown is ours.

[00:01:09] Randal Mcleaird: And so I've been waiting for this conversation for a while, just because Levi and I've been working together for a while. I've had a great experience with them and we go through and talk about the origin of Invown, how it got started. He talks about when crowdfunds are best used for the sponsor or the issuer and the types of deals that he has on his platform.

[00:01:27] Randal Mcleaird: And then also some of the times as an investor, you may be looking for. A crowdfund to invest in. So it's a solid conversation. Again, if you are looking to create an offering, if you're, you got this special type of investment strategy and you want to go out and raise some capital for it, I highly recommend you go and check out Invown and you consider doing a crowdfund doesn't work for every single type of offering, but it is a fantastic way to raise capital from anybody.

[00:01:54] Randal Mcleaird: You can advertise all kinds of things. So we dive in all of this on the show. If you're getting value out of the show, please go on rate and review. [00:02:00] Helps us a ton with the reach. And again, I can't recommend Invown enough. So I want to check out Invown with Levi. Hey Levi, welcome to the show. It's great to have you on today.

[00:02:10] Randal Mcleaird: I'm excited because you and I have been working together for a while on Invown with my offering and what I've got going on with you. And we haven't had the opportunity to sit down and talk about just business in general and Invown in general. So again, I'm excited to have you on the show. Thanks for coming on today.

[00:02:24] Randal Mcleaird: Real pleasure. Thank you for having me. For sure. For sure. Tell me what Invown does today. So anyone looking to either invest or set up their own offering understands what Invown does. 

[00:02:35] Levi Brackman: We are a crowdfunding platform. The technical term for it is a funding portal. So what that is basically if you would like to sell a piece of a real estate deal, a startup, a company.

[00:02:49] Levi Brackman: To an investor, you're selling securities and you need to be able to do that on a broker dealer or some kind of registered entity in order to [00:03:00] comply with SEC rules associated with selling securities. So we enable that as a registered entity, we enable people to be able to sell pieces of their business, whether it's real estate, whether it's a startup, whether it's we have a distillery, for example, on our platform.

[00:03:16] Levi Brackman: Currently, we have a bunch of real estate deals. We even have a litigation process. funding opportunity. So there's all kinds of opportunities, which people would like to be able to raise money for from investors and investors would like to invest in. And we facilitate all of that from the legal regulatory and technology perspective.

[00:03:37] Randal Mcleaird: Yeah, perfect. Okay. What was your background before Invown? How did you even get Invown off the ground? It's a unique type of platform that you're working on. 

[00:03:44] Levi Brackman: Yeah. So I was working at a company called the Priceline. Booking holdings. Back in 2019. And it's really a platform company. It's a, in the travel space, a lot of people have heard it. It's a well known brand here in the U S and you can [00:04:00] buy. Airline tickets, you can buy hotel rooms, you can rent a car on there, etc. So that's what it really is, a travel site. And the way they make money is they sit in the middle. They don't own any of the hotels, they don't own the airlines, they don't own the cars which are rented out on that platform. But any time Someone does a transaction, they make some money.

[00:04:22] Levi Brackman: So they sit there in the middle and it's a technology play and the technology enables people to be able to shop and buy airline tickets and hotel rooms and vacation packages and you can even buy a cruise on that. So I was working there and I'd been working for four years in the travel space, more or less, so I really understood that space and I joined Priceline.

[00:04:44] Levi Brackman: And I'd moved all the way from Colorado where I lived to Connecticut and I was renting a house there and it was a beautiful house and I wanted to buy this house and the landlord was offering me a certain price for it, which was quite a bit more [00:05:00] than what the market really had for this house. I still wanted to buy it.

[00:05:03] Levi Brackman: So I started to think into the various different. options for financing, the house, I wasn't going to buy it with cash. There's just a traditional mortgage, but I found that a lot of home buyers, especially today are going to be able to relate to this. I found that unless I put 20 percent down, I was going to be subject to this thing called PMI, private mortgage insurance.

[00:05:26] Levi Brackman: And it's a really nasty little insurance that you have to pay because it's, just makes the whole house more expensive, but you're forced to buy this PMI and, once the house goes up in value, you can then have the PMI drop off, et cetera. But I didn't want to have to pay PMI on the one hand.

[00:05:41] Levi Brackman: On the other hand, I didn't necessarily want to put down 20%. I already owned a bunch of houses, and this was going to be the third house that I bought as my primary residence, and I still owned the previous two. Putting another 20 percent down, I was trying to figure out. This got me really thinking about home ownership in a big way.

[00:05:59] Levi Brackman: I wasn't really a [00:06:00] real estate guy at that point. I still don't really consider myself a real estate guy, although I own a lot more real estate today than I did then. But I did have these properties, which I was renting out. And so I guess back then, and even today, I consider myself to be a guy doing real estate rather than a real estate guy, if you understand the difference.

[00:06:16] Levi Brackman: So basically, I started thinking really deeply about this. And I was a data scientist at the time. And I was managing the AI team and the search team at Priceline. And I started really thinking from a financial and numbers perspective, maybe a better option of how people can finance their homes. And what I thought was that if we could help people finance this 20 percent down payment peer to peer, so basically get their friends to invest.

[00:06:43] Levi Brackman: 20 percent into the house, whether either buying it or even then I realized once if you create that ability of people to help you buy the house peer to peer, then you could also help people sell part of their equity peer to peer in their primary residence. And the beauty of [00:07:00] that would be that basically the safest asset class almost anywhere is primary residence because people don't usually default on their primary residence.

[00:07:09] Levi Brackman: People can default on other assets, if you bought a house, usually people don't default on that. They pay their bills. That's the first thing people pay is their mortgage. So I thought this was a really good asset class, which people could then sell if we could trade it. So I got really thinking into that and I put the numbers together and I realized that there's a business here.

[00:07:28] Levi Brackman: And on paper, it really worked really well. There's a lot of profit to be made on all sides, and I could create a platform where basically people could come, put their deal up, their house, and have other people come and sell and buy into it. And based on the numbers which I ran, and I put very extensive spreadsheets together, actually I created an app which put all the numbers in so I could show to investors how this worked and how it would be profitable.

[00:07:53] Levi Brackman: And I decided this was a good business and I was going to start this business. So I actually founded [00:08:00] it as Invown and Invown actually is made up of these two words, invest and own. So we would have investors and owners, and that was the idea that you have owners on the one side and investors on the other side, and therefore that was how Invoan was born.

[00:08:12] Levi Brackman: And I incorporated that company in February 2020, which was, you remember what happened in the end of February 2020. It 

[00:08:20] Randal Mcleaird: was an 

[00:08:20] Levi Brackman: interesting 

[00:08:21] Randal Mcleaird: time. Yeah, COVID was something like 

[00:08:25] Levi Brackman: people was talking about a little bit, yeah, COVID 19, it was November, December, something was going on in China, January.

[00:08:33] Levi Brackman: And then, when I incorporated in the 12th of February, 2020, it was starting to encroach on the U. S., but no one thought we were going to have lockdowns. No one thought that what was going to happen was going to happen. So I incorporated in February 12, 2020, and then COVID really happened the next few weeks.

[00:08:50] Levi Brackman: And I put it all on pause, I was like, let me see what happens here, it wasn't a good time in my view to leave my job, I had a pretty good job at Priceline [00:09:00] at the time, and it was paying me a decent salary, and so I put it on that, that on hold, but by the time September came around, or before, June, July, I realized that this was really going gangbusters and real estate was taking off like crazy.

[00:09:14] Levi Brackman: This not only wasn't impacting real estate, it was really making real estate accelerate. So I thought there was really good business here. So I started full time on Invown in September, 2020, and I was no longer an employee at Priceline. Yeah. And the goal was to build this platform for homeowners.

[00:09:31] Levi Brackman: And that's what I proceeded to try to do. There were a few, Legal hitches associated with this, because it's actually complicated to do from a legal perspective, because the first thing you come across is that what the homeowners are doing is they're selling securities in their home. Now it's important to define a security for those who don't know there's some such a thing As soon as you get into this you start learning these different rabbit hole.

[00:09:53] Levi Brackman: Yeah raises. Yeah, and it's called there's something which was instituted by the Supreme Court Called the [00:10:00] Howie test and the Howie test refers to a story that happened with this guy how we won't get into that But basically it posits That there are four different tests that need to be met in order for something to be considered a security.

[00:10:13] Levi Brackman: The first one is that there has to be an investment of money. So you're not investing sweat equity. You're not investing some other kind of something else. You're not donating some kind of bartering or something. You're actually investing money. Has to be in a joint enterprise and a joint enterprise means any kind of business.

[00:10:30] Levi Brackman: And a business, if you're investing in a house, that's also a type of a business. So it has to be money in a joint enterprise. It has to be an expectation of profit. So any type of, when you're expecting, for example, on Kickstarter or something where you're expecting a product back, that wouldn't be considered a security.

[00:10:47] Levi Brackman: So if you're expecting them to ship a t shirt or ship some kind of widget to you, that's not a, you're not buying it, you're expecting profit. And that profit is going to come about as a result of, and this is the fourth test, [00:11:00] the efforts of other people, not your own effort. So in other words, you're not showing up to work in this person's property or this person's house.

[00:11:06] Levi Brackman: That's the ultimate of a passive investment. Other people are working on it, you make a profit. If you have all these four aspects, then what you're selling is a security. And there are people who've tried to botch this to try and sell and buy real estate and say it's not a security. And they've done all kinds of fancy legal acrobatics to get around this and say it's not a security.

[00:11:27] Levi Brackman: I always took the view that ultimately all those arguments and those legal acrobatics would fall on deaf ears. when it came to the SEC. So the SEC will not buy that it's not a security. If it sounds like a security, acts like a security, it's probably a security and don't try to get around it.

[00:11:44] Levi Brackman: Although it's interesting that now with the Chevron rule being overturned by the Supreme Court, not to get into that, but no longer can the SEC now decide this is a major thing that's happened. I don't know if anyone's following it, but the Supreme Court basically just last week, they [00:12:00] overturned this Chevron doctrine, which basically is Chevron doctrine says.

[00:12:03] Levi Brackman: That the way these three letter agencies, S-E-C-F-B-I, et cetera, especially the SEC and agencies like those, the way they interpret the laws should be the way in which any kind of court also accepts the interpretation. In other words, they have the right to interpret the laws set by Congress the way they want to.

[00:12:24] Levi Brackman: And because of that, they have all these interpretations, so you have the laws, and then you have the way the SEC interprets those laws. And the SEC then basically acts as its own regulatory body, acts as its own legislative body in many ways. By basically deciding that this is the way we interpret it, and they would give out, letters which say, okay, if you do it this way, then we won't prosecute you.

[00:12:47] Levi Brackman: So you can get a non, there's a technical term for it, but basically a letter which says that if you do this, we're not going to prosecute you. They have this kind of leeway, and then decide that they will prosecute you, if you decide to interpret it [00:13:00] differently. Which leaves very little creativity on the part of legal teams to make an argument of what is and what isn't a security.

[00:13:08] Levi Brackman: So now, by overturning that, that's a major thing. Because basically, you can basically have your own standing to challenge the interpretations. Of the SEC, and the courts don't just have to accept the SEC's interpretation. Plus, the other part of that, I think, and people might know this better than I do, but the other part of that is that they have their own internal kind of ways in which they can prosecute people without going to the court.

[00:13:32] Levi Brackman: And that's also been overturned. They can't do that. They can't prosecute. They can't have their own internal kind of judges. 

[00:13:38] Randal Mcleaird: I'm curious to see this play out in the who's going to challenge that first, and be the one that takes, it's yeah, let it ride and see what happens and actually take this to court and then see how that plays out because that obviously hasn't happened yet.

[00:13:50] Randal Mcleaird: No one's, it's been a week. 

[00:13:52] Levi Brackman: Yeah. Yeah. I think what you're going to see here is that basically. The deference which people had to have towards [00:14:00] these SEC lawyers, these SEC, the SEC lawyers and these other lawyers had, you have to have deference towards them because the way they decided to interpret it, that's just the way it is, whether you like it or not.

[00:14:10] Levi Brackman: So when I was going through this process of trying to figure out, I thought that I had the perfect methodology through which we could create the ability for homeowners and investors to basically interact with each other. And there's one part of the law. So what we decided was that, we were going to have a reg CF platform, which is basically a funding portal, which is what we have.

[00:14:33] Levi Brackman: And that funding portal would be designed in order to enable homeowners to basically do these mini public offerings of their home. So just like what you've done, you've set up a reg CF offering for these houses, which you have now have people invest in. And they get a return for it. So it would be a similar type thing, but only with your own personal home.

[00:14:53] Levi Brackman: The difference that when you put your offering up, you now have a business and you manage [00:15:00] the investors and the securities for the investors, you manage that. Whereas homeowners are not going to have the ability to manage the investment. You need someone else to manage that investment. Who's going to manage the investment.

[00:15:11] Levi Brackman: So we said, we'll manage it. 

[00:15:12] Randal Mcleaird: So here's my question on the setup. And again, this is in the weeds, but could you not just have on your platform, if it's a, a hundred thousand dollar house for easy numbers and you need 20, 000 for down payment, could you not have a single investor go in and then it's just a second essentially, and now they're one on one.

[00:15:30] Levi Brackman: You could, but what happens if they default? What happens if they stop paying their mortgage? Who's there to protect the investor? 

[00:15:36] Randal Mcleaird: You get a third party servicer. The third party servicer, if they don't collect and they foreclose. That's what we do. We have a third party servicing company that collects all the payments issues.

[00:15:45] Levi Brackman: You could have all of that. You could absolutely have a third party servicer, but You would need to create this entity who understands what we're doing, and you would need to have them volume to do it. 

[00:15:55] Randal Mcleaird: Yep. 

[00:15:55] Levi Brackman: In other words you're not just gonna have any third party servicer for 20, [00:16:00] 000. Yeah.

[00:16:00] Levi Brackman: It's just, this was a new product which you used in the marketplace. So it's not that simple to find. So we thought we would do it, and that was part of our business plan. You get paid this fees and other kinds of stuff which are associated with that. That's what we were going to do. The SEC said, one second, you as a funding portal, you're not allowed to manage the securities.

[00:16:20] Levi Brackman: So I said managing securities, the idea of managing securities is what that means and what Congress meant by that was that just a hedge fund is managing securities, you're deciding when to buy, deciding when to sell, you're managing the security. A securities manager, what does someone who's a security manager, what are they doing?

[00:16:38] Levi Brackman: They're buying and selling on behalf of their client's securities. That's not what we're doing here. All we're doing is managing this process to ensure that it works well. We're not actually managing the securities. We're just managing or facilitating this ability for it to happen. And they're like no, this is managing securities.

[00:16:56] Randal Mcleaird: It seems like you would have had to set up like a second [00:17:00] LLC or a management company to actually do that. You know what I mean? 

[00:17:03] Levi Brackman: Yeah, but they didn't see it as a CEO and as the same company. They're not going to see it as separate entities. Yeah. In other words, yes, technically it's separate entities, but it's still the same management team.

[00:17:13] Levi Brackman: And therefore they would see it as, it would have to be, they would say it would have to be hands at arm's length. And so there's no recourse at that point. This is the way they see it. I couldn't appeal that to anyone else because But now with a Chevron ruling, if had I wanted to, I could say no, I'm sorry.

[00:17:30] Levi Brackman: I disagree with that. Yeah. We're going to have an outsider who's going to look at this, a judge who can decide who's right. Is the SEC right about this? Or are we right about it? Now this is all water under the bridge, what we were caught up in and what I couldn't get over because the SEC basically said, and we had high level conversations with attorneys at the SEC and they basically said, I'm sorry, this is managing securities.

[00:17:55] Levi Brackman: And there they were the final word on it. So that [00:18:00] ability then to actually do this successfully became very difficult. Yeah, but we've still wanted to be in this business. So we said, okay, we will just become a platform for people who are able to manage their own securities to be able to offer these securities to the public directly to anyone, just.

[00:18:16] Levi Brackman: Joe public to be able to wealthy, but so the idea was that anyone can invest in real estate, maybe not helping homeowners as much as we wanted to, unless homeowners are willing to manage their own securities, but certainly helping investors get into the kind of deals maybe they wouldn't be able to access, without a platform like ours.

[00:18:35] Levi Brackman: So that what we were doing and that's how, someone like you came to end up being selling securities or selling pieces of their real estate deals to the 

[00:18:46] Randal Mcleaird: public. Okay. Awesome. Thanks for the explanation. I mean that obviously you, you have been steeped in this for a while and you are in deep in the weeds and you know what's going on.

[00:18:57] Randal Mcleaird: What I want to talk about now is what is a [00:19:00] crowdfund best used for? What type of sponsors do you think would use the crowdfund the most or would benefit them the most? And then we'll transition to talk about investors as well. Who's the best type of investor looking at crowdfunds compared to a syndication on a multifamily deal type thing.

[00:19:16] Randal Mcleaird: So let's talk about sponsors first. Who does this suit the best when they have an offering? 

[00:19:20] Levi Brackman: So if I may just step one step higher level than that. Yeah. What is crowdfunding? Yeah, right? Because anytime you're looking for a single check or even two checks to fund any deal, whether it's from bank or whether it's from a couple of investors, that's not crowdfunding.

[00:19:36] Levi Brackman: You've basically got a couple of checks from a few people, but they say two's company, three's a crowd, right? So once you start to get multiple checks. Even if you're not using any crowdfunding site or anything like that, you're really crowdfunding, right? So even if you've got going to friends and family and you're saying, hey, I've got this amazing real estate deal, please, would you invest in it?

[00:19:55] Levi Brackman: And you have 10 of your friends or five of your friends who are investing in that deal, [00:20:00] you're crowdfunding. So let's be clear. Now, the other thing to be clear about is that what you're selling are securities. And we discussed what securities were previously, but what you're selling are securities. So if you're crowdfunding, usually you're selling securities.

[00:20:15] Levi Brackman: At any time you're selling securities, I would say, make sure you understand the laws, because there are rules and laws associated with that. And the reason why you need to be careful about the rules and the laws is because usually if everything's going fine, no problem. But the second something might not go fine, someone might be losing money, they might get upset, and the first thing they're going to do is they're going to go to their attorney and they're going to say, is there anything I can do?

[00:20:38] Levi Brackman: Is there any recourse here for me to get the money back? And one of the things they're looking to is did they comply with the securities rules? And if you didn't comply and you didn't, you don't have the right disclosures and et cetera, then they might say the sponsor didn't do all these things which were necessary.

[00:20:54] Levi Brackman: And therefore he has to give you all your money back because he didn't disclose all the risks associated with [00:21:00] it. Meaning you didn't understand what was really going on. You didn't realize you were going to lose all your money and you've lost your money. And now the sponsor's on the hook to return all the money.

[00:21:10] Levi Brackman: So it's really important to understand that if you're doing any of these deals, you're selling securities and their rules, especially disclosure rules that you have to comply with, or else you're creating significant risk for your business and for yourself personally. So if you're selling securities, there are really a bunch of different ways you can crowdfund.

[00:21:28] Levi Brackman: You can just crowdfund by sending out emails to all your friends. And then you would be using them a, so it's also really important to understand here that there are different. Regulations associated with it and each of these regulations has a different number and letters associated with them. So what you're using, so the rule is that you're not allowed to sell securities or you're not allowed to have any general solicitation for securities.

[00:21:54] Levi Brackman: You can't just go and solicit and ask people, Hey, please, can you buy securities from me? That's [00:22:00] the rule. Now there are certain exemptions or exceptions to those rules. So generally, the way you sell securities, most companies sell securities to the public is they do an IPO. That's really expensive to do and involves a lot of internal financial overview and a lot of disclosures and ongoing reporting and it becomes very expensive.

[00:22:21] Levi Brackman: Usually unless you're a pretty significant company, which has the ability to pay for that and roll those fees into whatever you're doing, you're not going to be doing an IPO. So what else can I do if I want to sell securities? What if I'm a startup? What if I'm, someone like your company, you want to be able to raise money to buy some single family homes because you have a really good opportunity.

[00:22:41] Levi Brackman: How do you do it? There are other exemptions that you can use and we can just go through those exemptions. And then by going through those exemptions, we can understand how Invo and fits in here. And then, who the item would be. I know this is a very 

[00:22:56] Randal Mcleaird: Let's do chunk it up, like a high level, quick overview on [00:23:00] those.

[00:23:00] Levi Brackman: So really high level. So if you just want to do friends and family, and you're not doing any kind of general solicitation, you just go into your friends, that's no problem. That's a 506B, that's chapter and verse of the particular law, 506B, no problem. Go ahead and do that. If you want to only raise money from accredited investors, but you want to send out emails, you don't necessarily know them, you've got a list of wealthy people you can send out that emails to, no problem, 506C.

[00:23:27] Levi Brackman: What if you wanted to do some kind of More general solicitation, and the people you're raising money from, let's say they're all in your church, but you're a part time pastor and you also do real estate. Or let's say you are just well known in your Rotary Club, and you want to send out emails to the general membership of the Rotary Club.

[00:23:47] Levi Brackman: Or you want to you name it. There's all kinds of different, let's say, your country club, or your neighborhood. And then we've got a client who's coming on board who basically they're buying a very [00:24:00] well known landmark in their little town. And what they want to do is they want anyone in the town to be able to Invest in this landmark and the redevelopment of this and they can go out there on the local radios and local newspapers, et cetera, and let people know, hey, redeveloping this, please come and invest and people can invest 10, 000, et cetera.

[00:24:21] Levi Brackman: They want to let everyone know about it. So now there might be accredited investors. There might be non accredited investors. They just want to let everyone get involved with it. So in that case, you're going to want to do something called EREXIA. which is regulation crowdfunding. That is mainly what Invown will specialize in.

[00:24:38] Levi Brackman: So the ideal client is somebody who has an audience or knows where, who their audience is quite well. So they know it's either in your case, for example, the audience would be people who listen to this podcast. In the case of, so people listen to this podcast, they know you and you can then tell them, Hey, I have this opportunity, you can invest in my [00:25:00] deal, et cetera.

[00:25:00] Levi Brackman: And then those people can invest in your deal. In the case of the guys buying the landmark, it's anyone who knows this landmark and understands the value that it brings and how wonderful it'll look if it's redeveloped right now. So I saw they're going to redevelop it and they're like, Hey, I now have an opportunity to get involved with something in the community, which is great, but also make some money while that's happening.

[00:25:19] Levi Brackman: And then could be the pastor, it's his people in his church, and on. But there's a lot of people who have audiences they want to solicit from, they might not be accredited, they still want them to be able to invest. That's what the Reg CF law is for. And that's where people in Invown come from. And we are usually, and as far as I know, in other words, I haven't done, there could be someone else just changed their prices recently, but as far as I know, we're the most cost effective site or the cost effective company for people who want to do Reg CF offerings.

[00:25:48] Randal Mcleaird: All right. That's solid overview and give some backstory and. Some examples immediately when you're telling that story and about the landmark, I'm like smiling just because it made me think [00:26:00] about every house we buy in a neighborhood. I'm just throwing some flyers up to all the neighbors. Hey, do you want to have a piece of this?

[00:26:06] Randal Mcleaird: You own piece of your neighborhood, this house down the street you could. So we're going to, we're going to do that. We're going to implement that. That's interesting. I love the idea of using it for that purpose. Say you are that pastor, you're listening and you, which is not the audience, it wouldn't be necessarily a donation.

[00:26:21] Randal Mcleaird: Like you don't need to set up a CF to get donations. That's a completely different thing. If your congregation wants to get a return from building the new east wing of the church, because that's the capital that you need to raise, then that's when you would use a CF, because you're going to be taking money in, and then whatever that money produces over time, they're going to get a return on that.

[00:26:42] Randal Mcleaird: Correct? Just want to make sure that's clear. 

[00:26:43] Levi Brackman: And that's really interesting because instead of asking people for donations. Churches are, if it's a good and successful church, they're enterprises which bring in money. So if you want to be able to build that new wing of your church, instead of asking people just to make a donation for it, you say make [00:27:00] an investment.

[00:27:01] Levi Brackman: This is going to grow our church, grows the membership. Therefore grows the dues or whatever else people do to pay for churches. And there's going to be some kind of return. Maybe it's not the highest real estate return because it's a church, but you get to have a return plus you get to give something back to your community.

[00:27:17] Randal Mcleaird: Yeah. Let's talk about the investor side. Because on the platform, again, we covered who the ideal sponsors, but let me touch on that a little bit more. I guess it's important to know the max that you can raise on 5 million in any given year. Correct? So if you're going after a large multifamily deal and it's a 20 million raise, like you're going to have at least a component that is not capped at the 5 million.

[00:27:39] Randal Mcleaird: And so I've seen lead sponsors use crowdfund as an add on to allow certain investors into deals, right? 

[00:27:47] Levi Brackman: Yeah, we have a deal like that right now on the platform. It's a garden style multifamily property, which they're buying or they've bought actually, at the current time they've actually bought it.

[00:27:58] Levi Brackman: They're still raising for some of the value add. [00:28:00] And it's on there on the platform. And what they found was that they raised a lot of money through their 506 C. The 506 C, remember, these are chapter and verse of these exemptions, right? The 506 C. says that you can raise money from the public and you can do general solicitation, but you have to ensure that any of the people who are investing are accredited.

[00:28:21] Levi Brackman: And what accredited means is that they're either earning 200, 000 a year or more over the last three years. So they can prove the last three years they've had 200, 000 a year consistently. Or, if they're married, it's 300, 000 a year consistently, or they have a million dollars of net worth outside of their primary residence, so their primary residence does not count towards that net worth.

[00:28:43] Levi Brackman: And if they have that, then they're considered accredited, and you have to verify that those people are accredited. before you can take their money. And there's a third party companies and we use also third party companies of people who do 506Cs on our platform. They can. We have one up right now, but before you can invest, [00:29:00] you have to upload documents and then get the, okay, yes, you're accredited.

[00:29:03] Levi Brackman: And then the money actually goes into escrow. If you're not accredited, money gets automatically refunded to you. So you can't invest unless you're accredited 506C. But what if you have, that's it. Like you said, you've got 20 million raise. And you've got 5 million of it, which you know, you can get from people who either don't want to prove they're accredited because some people don't want to upload those financial documents to a third party, or they're not accredited, but they still have money to invest.

[00:29:31] Levi Brackman: So what about that? So then you'll do a reg CF add on your five or 60, and then you'll do a reg CF as well, and that then opens up your race to all these people who are either non accredited or don't want to prove that they're accredited. 

[00:29:44] Randal Mcleaird: Can you do a five or six B with a CF? 

[00:29:47] Levi Brackman: The reason why you can't do that is because the 506B says that you're not allowed to solicit.

[00:29:52] Levi Brackman: The Reg CF says you can solicit. So they're not compatible with each other. 

[00:29:57] Randal Mcleaird: Yeah. Okay. Just want to clarify that because you and I had talked about this [00:30:00] in the past. I know when you came and spoke to the guys at apartment educators, that was one of the questions that came up. Okay. Again, 5 million cap, you can advertise anywhere and everywhere.

[00:30:10] Randal Mcleaird: You can bring anybody into it. Investments minimums can be as low as what, like 10, 100. I don't know if there is a minimum on those investments. 

[00:30:18] Levi Brackman: It's whatever the sponsor wants. 

[00:30:20] Randal Mcleaird: As a sponsor, you just have to think about how many you want, how many people you want to be managing. Essentially, how many investors you want to be managing.

[00:30:27] Randal Mcleaird: I found that it's unique in that you can craft your offering any way you want. That's how you can do a five or six C or B. You can craft it any way you want, but with minimums and with unlimited number of investors, it changes the dynamics of it. Essentially, you can do a thousand dollar minimum, 10, 000 or whatever it is compared to most reg D five, six B or C.

[00:30:50] Randal Mcleaird: You're seeing, 25 to 50 minimums. And some of those have even gone up. I think they're coming back down now for most of the offerings that I've been seeing lately. And so CF allows you again, because you [00:31:00] have a unique, 

[00:31:01] Levi Brackman: you can do on five or six C's a 10 minimum as well, just that. It's, but if, since you're only targeting accredited investors, correct.

[00:31:09] Levi Brackman: Accredited investors are not going to waste their time for 10 minimum. So in other words, if the idea isn't the minimum, the idea here is that you can basically, if you're anyway, going out there and you're telling everyone, Hey, please invest in my deal. Why then put up roadblocks and say, Hey, no, you're not accredited.

[00:31:26] Levi Brackman: You can't invest. If you have the money and you're excited about the deal, they should be allowed to invest. It doesn't matter who cares about the net worth. In the sense that if they want to invest and they have the money to invest, they should be allowed to. Now, to be clear, there are certain limits to what someone can invest.

[00:31:43] Levi Brackman: In other words, if you're only earning 100, 000 a year and your net worth is 2, 000, the maximum you can invest in a REG CF in any given year is 10, 000. So it's 10 percent of your net worth. Your net worth or of your annual income, whichever one is greater. So if your annual [00:32:00] income, let's say your net worth is 200, 000 and you only earn a hundred thousand, then you can invest up to 20, 000 in any month period.

[00:32:07] Levi Brackman: But there are limits and those limits, these are all self reported. So you report it and you put that information into the platform as you try to invest. And we will enforce those limits based on the information that you put in. But the point here is though that why limit? The people who can invest in your deal.

[00:32:26] Levi Brackman: Why limit that 

[00:32:27] Randal Mcleaird: just 

[00:32:27] Levi Brackman: because the law limits it? There's a way in which you can use a different law to not limit it. And now you can do advertising. You can go out there to your church group, your country club, or whatever else you're going to Facebook groups, the podcast listeners tell them, Hey, you can invest and no one is excluded from the ability to invest.

[00:32:46] Randal Mcleaird: That's awesome. Okay. Let's talk about, again, you have a number of. Opportunities on the platform. We have interviewed a bourbon investment, right? And I know you have one on there as well. And so it's important to know [00:33:00] that again, when you're looking at converting commissions into cashflow we're all out there.

[00:33:04] Randal Mcleaird: We're all making money. We're all selling houses and we're selling retail, commercial, whatever it is that you're in. And then you're earning these commissions that on a platform like yours is offering a variety of different types of investments. It's not necessarily just real estate based. Like I said, you had that bourbon one.

[00:33:22] Randal Mcleaird: So speak to that, what are you seeing coming down the pipe? You obviously have unique position where you are on the platform and you see who's coming on. So what types of investments are people putting out right now? Is it mostly real estate or are you seeing some other things that are coming down the pipe?

[00:33:38] Randal Mcleaird: We're seeing everything. It's 

[00:33:39] Levi Brackman: interesting because we're agnostic at this point about the type of offering being offered. Because. We're just facilitating your ability to be able to sell pieces of whatever you're selling to the public. So we're agnostic. We're seeing a lot of real estate still, but real estate, I probably don't have to tell this audience, but real estate is not as.[00:34:00] 

[00:34:00] Levi Brackman: easy to do as it was just a couple years ago. And so that's just the way it is. And it's really interesting. The market is frozen. It's really interesting to watch because, you would expect that, if they're not so many buyers, then prices would drop, but they haven't. So it's a really interesting kind of market that we're in right now.

[00:34:18] Levi Brackman: And it's the same for all asset classes. It seems, it's the same thing for commercial. Maybe there's movement in office, but there isn't really like maybe really big office buildings, like in the major office buildings in San Francisco and New York. Yes, there has been movement, but the small office buildings.

[00:34:35] Levi Brackman: There's no movement in prices there either. It's just, it's really interesting market right now and challenging for a lot of people. So real estate is still coming on for sure, but not as much as one might expect. But there are other deals also, see the bourbon one.

[00:34:50] Levi Brackman: There's a manufacturing one, a french fries manufacturing plant. I 

[00:34:55] Randal Mcleaird: saw that potatoes. Yeah, I saw that on there. 

[00:34:57] Levi Brackman: There's other deals which are in the works as [00:35:00] well, which aren't real estate. So there's a health. care company we're talking to and is the latest company which signed up with us. Actually, what they do is they do therapy for acupressure points. It's alternative medicine. So that's the latest company which signed up with us. So it's really, and that's an alternative asset, right? If you're a person who really likes, alternative medicines and alternative healing practices, whether it's acupuncture or homeopathy and that's your kind of thing, and there are a lot of people like that, then this is a company which is innovating in that space.

[00:35:36] Levi Brackman: There's another company we're speaking to, which is Does a nutrition, they do very customized nutrition for the individual based on getting to know you and taking all these surveys on different points of data related to your health and wellness, and then they will basically create a custom nutrition.

[00:35:56] Levi Brackman: Package for you and even ship you the food. 

[00:35:59] Randal Mcleaird: Yeah, [00:36:00] that's interesting. Let's talk about that. Okay. Cause it's cause you're seeing businesses that are raising capital for their business through crowdfund, right? That is in essence, that's what you're doing. You're selling shares or interest in your LLC whenever you're raising capital.

[00:36:11] Randal Mcleaird: That's pretty much what's happening. 

[00:36:13] Levi Brackman: It could be a C Corp as well. It doesn't have to be a LLC. Yeah. Any kind of 

[00:36:15] Randal Mcleaird: company. Correct. So I guess what I'm getting at is for real estate, there are, if you do a big offering for like multifamily or something there's pretty tried and true.

[00:36:26] Randal Mcleaird: Predictable return profiles. Hey, we're going to do seven, perhaps 70, 30 split, blah, blah, blah. That's so because you have this unique insight, you're seeing all these offerings that come and they're going to put it on your platform. Are you seeing higher return profiles for the businesses?

[00:36:41] Randal Mcleaird: Is it about the same or like, how do those things, how are they structured? Again, as an investor, if I want to put some money into one of these offerings on your platform, like what have you seen that are some of the higher returns? Type of offerings. So 

[00:36:54] Levi Brackman: pretty interesting. So some of the companies don't have return profiles in that.

[00:36:59] Levi Brackman: [00:37:00] So if you're a company, which is a SQL, then the goal is eventually to list it on some kind of platform. Whether it's an ATS or alternative trading system, which is like its own entity, which enables people to buy and sell securities. There's the pink sheets. I don't know if anyone remembers the pink sheets, but it's also like a trading platform.

[00:37:21] Levi Brackman: They call it, they used to call them penny stocks, maybe they still do. And then you have the NASDAQ, you have all these different exchanges where you can list. So eventually the goal is some of these companies is that these, you Securities get listed on an exchange and then there's an equity event.

[00:37:35] Levi Brackman: There's a way in which you can then cash out at that point So that's another way in which you can make money So if you buy for example, you are able to buy securities in facebook really early on And then a very cheap price and it grew A thousand times the size, a hundred thousand times the size. And it was listed on the stock exchange and then you would sell it.

[00:37:57] Levi Brackman: You've made a lot of money, [00:38:00] probably a lot more than you could ever make on any real estate deal, literally, you just don't get those multiple. So if you see a deal like this where you really feel that this is, you're getting in early with your reg CF in a company, which is going to blow up, then your return isn't necessarily a pref.

[00:38:17] Levi Brackman: It's not necessarily a percentage return, which you're getting or any kind of. Dividend or coupon. It's the fact that there's going to be an equity event in the future and your securities are just going to be worth much more money than they are. All right. Begs 

[00:38:31] Randal Mcleaird: the question, how are you going out for you?

[00:38:35] Randal Mcleaird: Do you want those companies on your platform? Okay. So how are you going out and just as marketing for your own company, how are you getting these unicorns to come on and Hey, give me a little sliver, get on here, like You guys raise a little bit of capital through the CF and yeah, because you're competing, right?

[00:38:52] Randal Mcleaird: Those companies are competing with venture capital. So not a doubt. 

[00:38:56] Levi Brackman: Venture capital is very hard to come by now. Venture was [00:39:00] hurt badly. In the last couple of years. So if you are a startup looking for venture capital, it was always hard to get venture capital money because it's the riskiest capital and the most expensive capital out there.

[00:39:10] Levi Brackman: Think about if you're a real estate person, you've heard of hard money loans. So venture capital is like hard money loans on steroids for startups. It is really expensive capital. In other words, they expect to be paid back, not just 10 times, but hundreds of times what they put in. And that comes mostly out of the hides of the founders because they end up with preferred equity.

[00:39:32] Levi Brackman: So it's just a really expensive way of raising capital, which is fine. If it's available and you're going to become that big, that's great. If you're offering the same deal to crowdfunding investors, it's also very expensive, but it might be easier to convince mom and pop, or, just the regular investor out there to invest in you then.

[00:39:50] Levi Brackman: The very scarce capital today of venture capital. So there is a real opportunity here because venture capital is so hard to get. There is an opportunity here for just a regular [00:40:00] investor to come and take a look at some of these companies. Because some of these companies are not going to VCs anymore.

[00:40:04] Levi Brackman: They're saying, I know how hard that is. I might as well go straight to the crowd. But it's really not for me to make a judgment as the platform of whether the company has the potential to become that big or not. That is for the individual investor to look at. I don't have an ability to be an expert in whether, an acupressure company is actually going to blow up and is going to become the next Google.

[00:40:27] Levi Brackman: I don't know enough about that space. But this company will put up its deck and all its market research and who the founders are and their abilities. And the individual investor has to look at it and know that there's big risk here, but potential gains as well. And knowing the risk that they could lose all of their money, if they still want to invest, then they should.

[00:40:47] Levi Brackman: Usually it's not going to start with a hundred thousand dollar investment. It's usually going to start, a hundred, 200, 500. So you, money, which people can afford to lose. But if it goes big, then they can make really well. I would say the other part of this is that you should do it with a [00:41:00] strategy.

[00:41:00] Levi Brackman: People shouldn't put all their investment dollars into startups. It's very risky. You need to be able to have a strategy where you do your due diligence on the company and you put it into enough different startups, which you believe in that one or two of them are going to do really well and the rest might fall by the wayside.

[00:41:18] Levi Brackman: And that's how venture capital also has. And a venture capital, the way they do it is that they invest in a hundred companies, they think that 90 of them are going to go, I'm going to go bust. 

[00:41:26] Randal Mcleaird: So if you think of it in those terms, those guys are professional investors. And so if they're thinking one in 10, it's going to make it.

[00:41:34] Randal Mcleaird: Then you should diversify as well. This is not investment advice. 

[00:41:38] Levi Brackman: There's no investment advice here, but it's just like modern portfolio theory basically says to diversify. So I'm just like, I'm not giving anyone investment advice. Of course not. And we're not allowed to, but I'm just saying that, you should look at it as part of a strategy rather than, maybe not if you just want to have a bit of fun with it.

[00:41:55] Levi Brackman: That's fine too. What I'm saying is that if you're really looking at this as an alternative investments, you should [00:42:00] look at it as. a strategy and as part of your diversification and part of your, this is where real estate is slow and steady, mostly income, good returns, risky as well, but maybe not as risky as startups.

[00:42:13] Levi Brackman: Startups are going to be higher risk, but potential much larger returns. So you just need to look at it that way as well. 

[00:42:20] Randal Mcleaird: Again, I'm on the platform. We have our offering up on there and I've enjoyed the experience of working with you guys to get it on there. And it was new to me and setting up a crowd fund in general, but working with you guys, it's been easy.

[00:42:35] Randal Mcleaird: You guys, I know you talk about the risks and all the documents and everything that you need, but you guys have all those documents and the team in place to get those documents up. And that. Is something that's important to know. So yeah, like what is it? A form C is what you need. And then you need a thousand disclosures and CYA docs and everything, but it's all up and it's on the platform and then it's relatively easy.

[00:42:57] Randal Mcleaird: Like I walked through the process of [00:43:00] investing. And literally you go through and you click on the invest now button, and then you go through like, how much do you want to invest? And then do beep, boop. Okay. There's your money. And it's pretty easy. So again, if you are a sponsor, if you're looking to get into raising capital for an investment that you have, I would highly recommend checking out Invown and Talking to Levi about it, because again, the process on the front end is relatively straightforward.

[00:43:24] Randal Mcleaird: It's pretty easy and you guys have it down to a science. So it's that was very helpful. And then if you're an investor and you're looking to invest again, it's almost You show up to a salad bar and you get to pick what you want to have, right? It's that type of thing where there's different types of investments.

[00:43:38] Randal Mcleaird: It's not just real estate. It's not just a company. There are multiple different things that you can look at and you can say, I like this industry and I like the return profile of this deal. I'm going to invest in this thing. Offering and then you can pick and choose. And so that's, again, one thing that I really like about the platform and what you guys have built.

[00:43:54] Randal Mcleaird: I applaud you, man. It's very cool. And the transition from, we didn't even get to that, but the transition from [00:44:00] the original idea to what it is now. That's an interesting story that we can probably dive down and talk about again as well. But 

[00:44:06] Levi Brackman: the comment I would make about that is that people don't realize this, that I think a lot of business people do, but perseverance is so important in business as in life.

[00:44:16] Levi Brackman: Yeah. But there are so many times when we hit dead ends as we were trying to do what we were going to do. And it's always the idea of being able to navigate that path and find, often, start starting a business. You have one idea and you end up somewhere else, but you're creating a business.

[00:44:34] Levi Brackman: It's not like an ideology where, I can't, or a religion where, I can't change the God I believe in, you shouldn't have in business, these articles of belief 

[00:44:43] Randal Mcleaird: you 

[00:44:43] Levi Brackman: go where the market needs you to go and then just. Overcome those obstacles and listen clearly to what the market's telling you.

[00:44:53] Levi Brackman: All of what the regulations are telling you, especially the laws, don't try and go through those, you got to make sure you keep to [00:45:00] those and then adjust accordingly. So we did a lot of adjustments along the way. We're still doing adjustments. Because 

[00:45:07] Randal Mcleaird: yeah I'll speak to that on the offering side as well.

[00:45:10] Randal Mcleaird: I think if you are considering putting an offering together, one of the easiest things that you can do before you even spend the money or the brain damage required to put something like this together, go and talk to friends, family, everyone, and say, this is my investment thesis. This is what I think we're going to be doing, but this is what we will be doing.

[00:45:30] Randal Mcleaird: And this is how I intend to compensate. Our investors for that. Does that sound good, bad? Should we change something? Cause then you can refine your offering. Once you put it onto a platform like in bone, because just like any business, if you're selling something, no one wants, you're just wasting a lot of time and energy.

[00:45:48] Randal Mcleaird: So find out what those investors or your people want, and then put that together as your offering, because. Yeah. You'll just waste time. Otherwise. So with business in general, a little nugget there for people 

[00:45:59] Levi Brackman: [00:46:00] fall 

[00:46:00] Randal Mcleaird: in 

[00:46:00] Levi Brackman: love with 

[00:46:00] Randal Mcleaird: their own ideas 

[00:46:01] Levi Brackman: and then getting them to dislodge from those ideas. It works in politics, by the way, because you can convince people of everything because you don't need to do the data to back it up.

[00:46:08] Levi Brackman: But in business, you got cold, hard numbers of dollars. They're either coming in, not coming in. And if they're not coming in, it's probably because There's no customer for what you're doing and therefore you should adjust, right? And so now business, which is highly regulated, all these other stakeholders we also need to care about, which are regulators and the SEC and those types of things.

[00:46:32] Levi Brackman: So it's a little bit more complicated, but at the end of the day, you need to be listening to all of those things and you can't just charge full steam ahead. And I'm going to, some people have that view. I'm just going to break through it by sheer willpower. And I guess for some people that works sometimes.

[00:46:47] Levi Brackman: But I would say listen to your market really carefully. 

[00:46:49] Randal Mcleaird: Yeah, for sure. Levi, look, again, we covered some ground here. I, again, want to just plug you guys and encourage anyone to go out. If you're thinking about having a [00:47:00] capital raising event for any type of investment that you are working on, if you're short term rental operator, or you are midterm rental operator, or you're just trying to do what we're doing we're buying houses, we're creating notes.

[00:47:10] Randal Mcleaird: We're buying land and creating notes and there's money in those investment opportunities. And if you're the expert in the field and you think you can have some investors come along for the ride with you, then go check out Invown. com. Super simple. I N V O W N. com and reach out to Levi and his team and get started with the process and at least learn a little bit more about it.

[00:47:31] Randal Mcleaird: So Levi, you got anything else you want to leave anybody with? 

[00:47:33] Levi Brackman: Yeah. Two things. First of all, using it as a resource. In other words, I'm super easy to find calendar. com forward slash inbound. So jump on my calendar. Always happy to talk to people. You do not have to become my client for me to add value to you.

[00:47:49] Levi Brackman: If you just want to discuss this stuff through, I'm not a lawyer, but I know a lot about securities laws. And I can talk through some of those things with you. I can help you think about how to structure deals, et cetera. So one of the other [00:48:00] things we do like boutique and therefore we really are consultative with our clients.

[00:48:04] Levi Brackman: And you don't need to be a client signed up with me to grab time and to have conversations. I'm here to add value to you. And I know that if I add enough value over time, you might become a client or someone else, will become a client of ours. So just use me as a resource as well. Jump on my account if you'd you just want to talk this through.

[00:48:22] Levi Brackman: You've got a question. Does this make sense for crowdfunding? Maybe there's another exemption you should use. Maybe it's just a friend and family around, whatever it is, happy to talk about it. Even if you're not becoming my client, even if you don't want to do a crowdfunding round immediately, happy to talk about it.

[00:48:34] Randal Mcleaird: Take them up on it. That's great. Levi, appreciate it. It's always good catching up. Hey guys, we'll catch you on the next episode. Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could obtain financial freedom and become work optional?

[00:48:49] Randal Mcleaird: If you want to stay up to date, the best way is to make sure you're subscribed. So if you haven't done that, go ahead and do it now. We'll catch you on the next episode. 

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Randal McLeaird

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