CREI Partners

Real Estate Investments

Building Passive Income

Episode 34: Subscription Agreements & Investor Questionnaires – What You’re Actually Signing

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Building Passive Income
Building Passive Income
Episode 34: Subscription Agreements & Investor Questionnaires – What You're Actually Signing
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Welcome to Building Passive Income with CREI Collin

You’ve reviewed the deal, read the PPM, and now the sponsor sends you the subscription agreement and investor questionnaire. But what exactly are you signing? In this episode, CREI Collin breaks down the final legal documents you sign before investing in a syndication. You’ll learn what a subscription agreement is, what an investor questionnaire is, what representations and warranties you’re making, how accredited investor status is verified, and what red flags to watch for before you sign. This is your step-by-step guide to understanding what you’re committing to.

Learn what you’re signing when you invest in a syndication. CREI Collin breaks down subscription agreements and investor questionnaires.

Key Topics Covered:

  • What is a subscription agreement and what does it include?
  • What is an investor questionnaire and why it matters
  • Key representations and warranties you’re making when you sign
  • Understanding accredited investor verification: 506(b) vs. 506(c)
  • Investing through entities: LLC, trust, or retirement account
  • Red flags and final checks before you sign
  • How to verify wiring instructions and protect yourself from fraud

Timestamps:

  • [00:00] Introduction: What am I signing?
  • [02:15] What is a subscription agreement?
  • [04:30] What is an investor questionnaire?
  • [06:00] Key representations and warranties
  • [09:15] Understanding accredited investor verification
  • [11:30] Investing through an entity (LLC, trust, retirement account)
  • [13:45] Red flags and final checks before you sign
  • [16:00] Recap and action steps

Key Takeaways:

  1. The subscription agreement formalizes your investment and includes your personal information, investment amount, and representations and warranties about your eligibility and understanding of the risks.
  2. Investor questionnaires are commonly used in private offerings to document eligibility and support compliance, collecting information about your financial status, investment experience, and accredited investor status.
  3. When you sign the subscription agreement, you’re making representations about your eligibility, your opportunity to review the PPM, your ability to bear risk, and your investment experience. Answer honestly and accurately.
  4. Under Rule 506(c), sponsors must take reasonable steps to verify accredited status through documentation or third-party verification. Under Rule 506(b), sponsors typically rely on questionnaires and a reasonable belief standard, though practices vary.
  5. If you’re investing through an entity (LLC, trust, or retirement account), you’ll need to provide formation documents, an EIN, and authorization documents. Consult with your attorney and CPA, and be mindful of tax considerations like prohibited transaction rules and UBIT or UDFI for retirement accounts.
  6. Red flags include pressure to sign quickly, missing documents, unclear wiring instructions, changes to terms, and unwillingness to answer questions. Always verify wiring instructions by phone before sending funds.

Resources Mentioned:

  • Subscription Agreement
  • Investor Questionnaire
  • Private Placement Memorandum (PPM)
  • Operating Agreement / Limited Partnership Agreement
  • W-9 Form
  • SEC Rule 506(b) and 506(c)
  • Schedule a consultation with CREI Partners: Let’s Talk

Action Step:

Before you sign your next subscription agreement, review this episode and use it as a checklist. Make sure you understand what you’re signing and that you’ve completed all due diligence.

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Disclaimer:

This podcast is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. Always consult with qualified professionals—including a real estate CPA, securities attorney, and financial advisor—before making any investment decisions. Past performance is not indicative of future results. All investments involve risk, including the potential loss of principal.

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