How to Find Investors for Real Estate Deals, Legally

Most first-time sponsors find investors in their own network: friends, coworkers, past clients and people who already trust them. How you can reach those people depends on your exemption. Under Rule 506(b) you cannot advertise, so you offer the deal to people you have a real relationship with. Under Rule 506(c) you can market publicly, but every investor must be accredited and verified.

If you are the sponsor, we built DoorRaise to run that raise for apartment buildings, with flat-fee pricing. This post is about the finding part, which comes before any software. For the whole process, see our real estate syndication guide.

Which exemption are you using?

Your exemption decides who you can approach and in what way. Most sponsors choose between two options.

Topic	Rule 506(b)	Rule 506(c)
Who you can offer it to	People you have a pre-existing, substantive relationship with	Anyone
Public posts, ads, open webinars	Not allowed	Allowed
Investors	Accredited, plus up to 35 non-accredited purchasers in any 90 days who are financially sophisticated, alone or with a purchaser representative	Accredited only
Verification	Reasonable belief they qualify	Reasonable steps to verify each investor

In 2025, the SEC reports 30,315 new Form D offerings under Rule 506(b) and 3,989 under 506(c). The counts can overlap because an offering can claim more than one exemption, and some issuers do not file.

Still, most private raises happen through relationships. For the full comparison, read 506(b) vs. 506(c).

Where do real estate sponsors find investors?

Sponsors find investors in a handful of places, and the first two work for almost everyone. Start with the people who already know you.

Your existing network. Friends, family, coworkers and business contacts you know well. This is where many first deals come from, and it works under 506(b) if the relationship is substantive.
Past co-investors and partners. People who have invested with you or your partners before. SEC staff guidance names existing and prior investors, and investors in management's prior deals, as examples of a substantive relationship.
Your content. YouTube, a podcast, a newsletter or social posts that teach real estate build trust before you have a deal. Followers do not count as a substantive relationship on their own. See how to raise money on social media legally.
An investor list with a real qualification step. Learn about people's finances and experience on a call before your offering starts, not just when you send the deal.
Co-sponsors with their own networks. An experienced operator with real duties can bring investors who know them. See paying creators and capital raisers before you structure it.
Meetups and conferences. Good for meeting people. But speaking about a live deal at an event open to the public counts as general solicitation, so do that only under 506(c).
Public deal pages and ads under 506(c). Once you are using 506(c), you can share one link for the deal anywhere, as long as every investor is verified before they invest.

What about demo days?

Rule 148 allows certain events with more than one participating issuer, sponsored by colleges, nonprofits, government bodies or angel groups, incubators and accelerators. Advertising for the event cannot reference a specific offering, and the sponsor cannot give investment advice or take compensation for introductions. Most real estate sponsors will not fit those conditions, so ask your attorney before relying on it.

How do you build a "pre-existing, substantive relationship"?

You need to know a person's finances and experience before your offering starts, and you need to have evaluated them. The SEC has not published a checklist, but its guidance points one way.

SEC staff wrote in the 2015 Citizen VC letter that "the quality of the relationship between an issuer (or its agent) and an investor is the most important factor." The same guidance says no specific duration of time or short-form accreditation questionnaire, on its own, creates the relationship. A checkbox is not enough.

In practice, that means:

Have a real conversation about the person's income or net worth, investing experience and goals.
Keep dated notes of what you learned and when.
Do this before the offering begins, not after you have a deal to sell.
Only then send the deal.

Our guide to what makes a follower eligible for 506(b) goes deeper for creators.

Worked example: filling a $1.5 million raise

Here is how the math looks for a small raise. This is illustrative, and the conversion rate is an assumption, not a statistic.

Say you need $1,500,000 of equity and your average check is $50,000. That is 30 investors ($1,500,000 divided by $50,000). If 1 in 4 qualified conversations ends in a commitment, you need about 120 conversations (30 times 4).

120 conversations is a lot of calls. That is why sponsors start building the list months before the deal.

Under 506(b), those calls are the relationship you need. Under 506(c), you can add public posts to widen the top of the funnel, but every commitment still goes through verification.

If you can reach larger checks, the math shifts.

Under SEC staff guidance from March 2025, a sponsor may reasonably conclude it took reasonable steps to verify in a 506(c) deal if a natural person commits at least $200,000 (at least $1,000,000 for an entity), gives written representations that they are accredited and did not finance the investment through a third party, and the sponsor has no actual knowledge to the contrary. That guidance is a staff no-action letter, not a rule, and it has conditions.

At $200,000 a check, the same $1,500,000 would need 7.5 checks, so eight. Ask your attorney whether it fits.

Can you switch from 506(c) to 506(b) later?

Yes, with care. SEC staff guidance dated January 23, 2026 (CFI 148.01) says an issuer that solicited people through general solicitation in a 506(c) offering can sell to them in a later 506(b) offering only if it established a substantive relationship with them before the 506(b) offering began. It says you cannot create that relationship just by waiting. Online-only contacts are likely a harder case, so get counsel involved.

What should you avoid when looking for investors?

Most mistakes come from marketing before the structure is chosen or from paying the wrong people. Avoid these.

Paying finders. Section 15(a) of the Exchange Act makes it unlawful for a broker to induce purchases of securities unless registered. Paying someone per investor or per dollar raised can put them in that category.
Public pitches under 506(b). A public post, an open webinar or a newsletter that pitches a live deal is general solicitation, which Rule 502(c) does not allow in a 506(b) offering.
Promising returns. Projections in public posts are risky under any exemption, and antifraud rules apply to every private placement. The SEC's investor alert says that promises of high returns with little or no risk are classic warning signs of fraud.
Skipping verification under 506(c). A self-certification box is not enough. See accredited investor verification.

For the broader line between teaching and pitching, read what is general solicitation.

Our take

Our opinion: the best investor list is one you built before you needed it. Sponsors who start calling friends the week they go under contract tend to run into timing limits, because a relationship cannot be created overnight.

We also think most first-time sponsors should start with 506(b) and their own network. 506(c) is a tool for sponsors with an audience, and the verification cost and effort are real. If you do not need the public reach, you may not need the extra step.

Trade-offs and who this is not for

Each route has a cost. A network-only raise is slow and limited by who you know. A public raise reaches more people but needs verification of every investor and puts your marketing under scrutiny.

This post is not for people who want to raise from strangers on a cold list. Cold outreach to people you do not know is general solicitation unless a relationship exists.
If you have no network and no audience, the right first step may be a co-sponsor, a smaller deal, or investing in someone else's deal first.
If your followers are mostly not accredited, a 506(c) raise will not work for them. See non-accredited followers and your options.

How DoorRaise fits in

DoorRaise helps sponsors raise equity for apartment buildings with 5 or more units from people who already trust them, under Rule 506(b) or 506(c). You get a deal page you can share, live call sign-up for investors and accreditation checks on every investor.

$500 at setup: the deal's LLC (including the registered agent), investor documents, an escrow account in the deal's name, the deal page, live call sign-up and accreditation checks on every investor.
$5,000 at closing, from the funds raised and only if the deal closes: attorney review of the offering documents, background, contract, title and loan checks, Form D filing and e-signing.
$3,500 a year while you own the property, from the property's income: bookkeeping, the tax return and K-1s, payouts and updates.

State filing fees are included in the $5,000 closing fee. The $500 setup fee is not refunded if the raise does not close. We do not hold investor money, we do not recommend or rank deals, and we are not a law firm. We cannot tell you which of your contacts has a substantive relationship with you. That call, and how you market, are for you and your attorney.

Ready to raise? Create your free sponsor page or see pricing.

FAQ

Can I post my apartment deal on Instagram or YouTube?

Among Rule 506 options, only under 506(c), and only if every investor is verified as accredited. Under 506(b), public posts about a live deal are not allowed. Reg CF and Reg A also allow public offers, with their own limits.

How long do I need to know someone before offering them a 506(b) deal?

There is no set waiting period. What matters is that, before the offering starts, you know enough about their finances and experience to judge whether they are accredited or sophisticated and can understand the risks.

Can I host a webinar about my deal?

An open webinar that anyone can join is general solicitation, so it fits only a 506(c) offering. A private call with people you already have relationships with can work under 506(b).

Do my friends and family have to be accredited?

Under 506(c), yes. Under 506(b), you can include up to 35 non-accredited purchasers in any 90 days if each is financially sophisticated, but you must give them the required disclosure.

Can I pay someone to introduce investors?

Paying per investor or per dollar raised often requires broker-dealer registration. Talk to a securities attorney before you agree to any finder arrangement.

Can I use a paid ad to find investors?

Only in a 506(c) offering, with every investor verified. Paid ads are a published form of general solicitation, which 506(b) does not allow.

Sources

This post is general information, not legal advice. Talk to a securities attorney before you offer a deal to anyone. Rules and staff guidance are as of October 2026 and can change. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.