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Best Of PLP-066 – Private Lending & the SEC with Attorney Amy Wan

PLP 66 | Private Lending

PLP 66 | Private Lending


Not all are mindful of the laws that go along with private lending since some lenders base their transaction on relationships and trust. Although it all boils down to trust, being well-informed of the legal aspects of private lending will not harm anyone. In today’s time, there is a practical reality that people trying to raise a small amount of capital have limited ability to be compliant with securities laws, and this is what Attorney Amy Wan delves into. Founder and CEO of Bootstrap Legal, Amy breaks down the types of rules, regulations, and securities in private lending. As she explains when an investment loan becomes security, Amy reveals that lenders are much less regulated when you lend your own money to another investor. She goes in-depth on the event when you need to have a license when making loans, the legal documents required with investors, the process she does that make legal matters and paperwork less stressful to clients, and how she has brought digital and legal to smaller investors. On the side, she shares details about her podcast show, Law and Blockchain.

Listen to the podcast here:

Private Lending And The SEC with Attorney Amy Wan

Syndicating, Private Lending And SEC Compliance

I’d like to welcome you to this episode. I’m very grateful to have the pleasure of speaking with an attorney who happens to specialize in helping investors handling the paperwork and the filings required by the SEC, Securities Exchange Commission. My guest, Amy Wan, has an impressive resume to say the least. She lives on the leading edge of the financial and legal tech world and was named one of the Ten Women to Watch in Legal Tech by the ABA Journal, that’s the American Bar Association. I’m honored and grateful to have her on the show. I have a new slogan that I actually put on a Private Lender Podcast t-shirt. The back says, “Never trust, always verify.” Nonetheless, never trust, always verify is a perfect segue into an interview with an SEC attorney. Let’s go ahead and get down to the brass tacks and let’s get to the interview with Amy Wan.

I’ve got a special treat for you. Our guest is Amy Wan, Founder and CEO of Bootstrap Legal. I am excited to have her on the show. Amy, welcome to the show.

Thank you for having me.

Thank you for coming out and being interviewed. You deal in an area of expertise of the law that’s beyond my scope of understanding. You’re bringing it down to where people like me can participate, and I definitely want to get into that part of it. I promise we’ll keep this about 30,000 feet as much as possible and we’ll drill down when we need to because I know the law. You can go down some rabbit holes. Tell us a little bit about yourself and how you became the securities and syndication guru that you are.

I actually started my career in the federal government. We were doing interesting things in DC, international trade and international regulatory affairs. When I moved back to LA, there’s not much of an international trade law industry out in LA except for import-export compliance paperwork which was very different from negotiating free trade agreements. I started over. I became general counsel of an early stage real estate crowdfunding platform at that time. The interesting thing about that crowdfunding platform is that I had to deal with two different areas of law, one on the real estate lending side and then one on the actual security side. We did private lending. We would make hard money, private money loans to folks flipping houses and then we would fractionalize those loans and turn it into a security and sell it to accredited investors through our marketplace.

I spent a couple of years there and I learned the ins and outs of both of those different sides of the industry. I went on to become a partner at a boutique law firm that focused pretty much exclusively on a real estate syndication, more so the equity side and then it got interesting. I got to a point in my practice where I was spending every day writing the same fund documents over and over again. I thought this is inefficient. I befriended someone who was beginning in the syndication industry at the time. He’s now a large real estate syndication influencer. Back then, he came to me and said, “I want to raise $300,000 through syndication. How much will it cost?” I told him, “I’ll tell you the price. I know you’re not going to use me because the transaction cost doesn’t make sense.” Sure enough, I told him the price. He fled the other direction and I thought, “This is interesting. Folks trying to raise a small amount of capital have very limited ability to actually be compliant with securities laws.”

The SEC doesn’t care about that. I had dinner with a couple of folks from the SEC. I brought this up to them and they were like, “You still have to follow all of the securities laws anyway. I’m like, “I get that, but there’s this practical reality.” Given that I had worked at a tech startup, I thought I could do better. I whipped up some software. It’s like the TurboTax of real estate syndication and it actually automates the first draft of a lot of the paperwork that you need to sell a security. For me as an attorney, it’s great because I cut off twenty hours off of drafting, but it’s great for my clients because I can get them the documents faster. My prices tend to be a little bit lower because I’m so much more efficient. I’m not one of those attorneys who bills by the hour. I do flat fees and it makes so much more sense.

I heard you first on Kevin Bupp’s podcast a while ago. I was commuting to work and I was thinking, “I’ve got to get Amy on to talk about this. A lot of our audience will call or email and they’ll talk about the security side of things, the SEC and what investors or borrowers would have to do.” As I understand is that they issue the certificates or they issue the security. The SEC is concerned with them. On the private lending side, what type of rules and regulations do we have? I’ll back it up. Let’s look at it from, “I’m going to make a loan on the single-family house versus my best friend is going to get into an apartment complex and he’s syndicating twenty people together to get the equity stake so that we can go get the funds.” From a federal perspective, how do the investors and the lenders look?

When it comes to lending law itself, although there are some federal regulations and laws around lending generally, most of those are in the consumer context. When it comes to private money, a lot of this is done from a state regulation perspective. When you get into state lending laws, it varies state by state. Some states require you to have a license to do this. Some states don’t care. Some states, for example California, you can make a small number of loans and then after you reached that limit, then you have to have that license. There are different types of licenses you need. It’s all over the map. Generally, there are a couple of things that folks should keep in mind.

One of these things is usury rates. A loan that is usurious is when you’re charging too much for interest. Every state has a different usury rate. You generally do not want to go over it because the states and the regulators do not take kindly upon that, although in this market, it’s not much of a problem because the rates are significantly lower than they were a couple of years ago. Usury is one. Another thing to keep in mind is securities. If it’s one person lending to another person, that’s usually fine. When it’s multiple people banding together to lend to one person or even multiple people, then we have to think about a different set of laws. That’s securities laws.

At the end of the day, it all comes down to trust.
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The last thing is it depends on what you’re lending on. If we’re talking about single-family residential, lending to owner-occupied is different from lending to non-owner occupied. When it’s non-owner occupied, generally you’re lending to some LLC. There is a business entity. They’re a business bank account. The person is not supposed to live in it. There is a language in the actual loan documents that say, “This is a business purpose loan. I won’t use any of this for personal or household expenses.” Contrast that with when you’re lending in the owner-occupied context, suddenly that becomes a consumer loan. It’s not a commercial loan and that is very heavily regulated.

I do a lot of loans to people who do seller financing. It’s Dodd-Frank. There are lots of hoops we go through. We have it originated and there’s the test to make sure that that person can pay the mortgage and you’re not dodging them. You said it perfectly, once it becomes a consumer loan, then the regulators and the judges are not going to look favorably upon you. I don’t care if it is out of your Roth IRA. If you’re doing something wrong, they’re going to get you.

Not only that, it’s not just a whole different set of rules, but a different philosophy or mentality applies. If you’re lending to non-owner occupied, people are like, “It’s a business loan. It’s all for business.” You’re presumed to be sophisticated and all that stuff. When you’re doing a consumer loan and you end up going to court or something like that, then suddenly it’s not like, “A business loan deal went south.” It is, “You’re kicking someone out of their home.” It’s suddenly a much bigger deal. The states where they tend to be blue states or places where it’s a large metropolitan area, the judges in those jurisdictions are going to scrutinize this a lot more in favor of the borrower than the lenders. Be aware of all of that.

I tell people who want to be private lenders is to don’t go owner-occupied, not until you get a lot of experience and you get a legal team built behind you that can handle all this for you. The lawyers are there for their help. They’re there to keep us compliant and also to say, “I see you put this language in here, this can happen,” or “This is your worst-case scenario. Why don’t you try this?” It’s funny you mentioned usury laws because Quincy Long at Quest IRA always says, “What’s a little usury amongst friends? We all know each other here.” The way I understand it is there are no usury police out there. However, in Texas, 18% is our usury law. Let’s say I make a loan for 20% and I anger that borrower somehow, in some way. That borrower can go to court, take it to a judge and the judge says, “This is a usurious contract. It’s null and void and you don’t even have to pay that guy back his money.”

It’s not exactly the same, but I liken it to landlord-tenant law. There are many places where just because the tenant complains, everyone bends over backward for a tenant as opposed to the landlord. It sucks, it’s business and you don’t want to be in that situation.

From a securities perspective on the federal level, everyone’s got to check your own state. It would be worthwhile saying we’re not offering to sell any securities or anything like that. This does not constitute an attorney-client contract with you or anybody else. From the federal level, as long as a lender is making it person to person, it’s a business loan from me to a real estate investor to do a flip or a landlord wants to hold it for three years or whatever. There’s very little regulation on that. There may be some. Check with your state. From the federal level, the SEC, they’re pretty cool with it.

The SEC doesn’t deal with this whole lot, except to the extent that you get multiple investors involved. This tends to be on a very state level and it tends to be a very commercial discussion. The other big issue is licensing. Do you need a license to be making these loans, to be brokering them? That’s a state by state discussion. In most states, for non-owner occupied lending, you usually don’t need a license. There’s a handful of states where you do. There are several states that offer several different types of licensure. You could be a regular real estate broker, you can be a mortgage broker, you can be a loan broker or things of that sort. It’s a state by state discussion.

I do actually like that. The feds are like, “We’re going to make sure that you’re not taking advantage of anybody and then we’ll let everything else fall to the state.” You talked about brokering. I wanted to bring that up because in Texas, we’re a red state, but we’re pretty liberal when it comes to things like oilfields and guns. We’re awesome. We have a very short foreclosure process. I love to lend here. I’ll give you a scenario of maybe something I’ve thought about doing here, or maybe it’s something I’ve done. Let’s say that I find a deal, but I’ve already tapped out all my money out of my self-directed IRA and I don’t have any cash. I negotiate a loan to an investor and then I have somebody else fund it. Can I get a couple of points? Can they get the points off of the loan at closing or would I be considered a broker in the eyes of the feds?

The feds don’t care, but your state regulators are going to care. That’s one of those situations where you are going to have to figure out whether you need a loan brokering or a mortgage brokering license from your specific state.

We don’t have security in Texas until you get 30 people. It leads me to my next question. I want to get in your expertise because I don’t want to let you go and listen. Let’s say I’m making this step up. I’m going from my single-family. I’m an investor now, not just a private lender, but I want to become an active investor. I’m not going to go run out and sponsor syndication for a 200-unit apartment complex. As someone who is a single-family investor and lender, walk us through. A friend of mine is going to sponsor this deal. He’s putting it all together. He’s getting legal. He’s got his memorandum together and everything. Walk us through what you would suggest I look for as I go through my first syndication.

PLP 66 | Private Lending

Private Lending: When one person’s making a loan to another person, it is just a straight up loan. When we get ten investors to invest in a fund and make a lot of private loans to flippers, that’s security.


The first thing I’ll mention is that notes or debt instruments can be considered a security. When I said when one person’s making a loan to another person, that’s not a security, that’s just a straight up loan. When we get into fancier things where it’s like, “I’m going to get ten investors to invest in a fund which is going to make a lot of private loans to flippers or something like that,” suddenly, that’s security. In terms of what is and is not a security, there’s a very well-defined test on that. It’s called the Howey Test and it’s named after a dude named Howey. It’s a four-part test. What people are looking for to figure out whether or not you’re selling security is generally there’s an investment of money. It’s a common enterprise of people. It’s not one person to one person, but a group of people. The folks who are putting their money in are expecting some profit or possibly a loss.

Lastly and very importantly is that it’s based off the efforts of another or a third party. What that means is if you have all active investors, if you have some investor club where everyone says, “We’re all going to source deals together and whoever finds a good deal, we might all invest in it.” That’s not a security because it’s more like an educational group. If it’s something like, “I’m due diligencing all these deals that come in through the pipeline. I’ve determined that this one’s good. I may be putting some of my money in it or I don’t have to, but you guys are all going to invest money. I’m going to organize everything, package it all together and make the loan. I would do all the investor relations, all of that and check foreclosure. You guys don’t have to be involved. I will take care of that. Whatever profits come back, I’m going to distribute them to you.” Instead of an active investor situation, you’ve got a passive investor situation. There’s one person or a couple of people who are part of the sponsoring team where they’re handling the day-to-day operations.

All the people who are putting the money in, they are passive. They don’t want to deal with it. They are paying you to deal with it. You’re looking at situations where it’s the doctor that’s investing or the dentist who’s investing. They don’t want to be active investors themselves. They just want to invest money somewhere and then hopefully it makes them money. That’s when we’re talking about securities laws. Securities in the private lending context, it comes in a couple of different forms. The most popular form I see is someone wants to start some fund that makes hard money or private money loans all day long. They don’t want to do it with their own money. Instead, they’re going to get big checks from all these different investors and they’re going to invest that money. They’re going to manage it. They’re going to do all the due diligence and then pay a return on investment to their investors. That’s probably the most popular context with securities law and private lending meet.

I’ve had some guy on. He created a fund and they’ve been through it. It’s been quite a process for him to do that. What started off as, “Let’s put our money together now,” as opposed to, “Get everyone else’s money.” That is going to be a security. The passivity of it, “I give you money, you will make it for me and give me some of that back,” that’s how I understand the securities to work in a fund. What are some of the other ways besides funds that come together? Let’s say like in syndication, for example. A fund is usually not deal-specific, whereas the syndication is this commercial building or this particular apartment complex. Is there any difference?

There are three different categories that I usually talk about. One is what we call single asset syndication and that is exactly what it sounds like. I’ve identified one building and I probably have it under contract. If you are investing in this deal, you’re investing in the returns made from that property. There’s what I call a blind pool. That’s what you’re referring to you as a fund, which is there are no specific deals per se. Maybe I haven’t identified the multifamily apartment that I want to invest in or the group of them. Maybe my plan is I’m going to make all these private money loans, but I don’t know exactly what the loans are. You don’t know exactly where the money is going, but you do have a general business plan. You’re going to raise money and deploy the capital according to your business plan. The third is right in the middle. It’s what we call a semi-specified fund. That’s the situation where maybe you have identified one property but, whoever is investing are not just invested in that one property. They’re invested in that one property that you’ve identified, plus other ones that are not identified yet.

A lot of the times when folks do this, it will be like “You’re investing in two properties. I have one under contract, but I haven’t found the other one yet.” It will be a situation like that. The only thing I’ll say is when you’re talking about like multifamily syndication or taking down entire buildings, not so much the debt side, but the equity side. When investors are underwriting a deal, there are two things that they’re going to look at. One is the deal itself. I’m going to underwrite the actual property and then the underwrite sponsor. You have to have that relationship of trust. On a single asset syndication, it’s possible to underwrite both on a blind pool. You are only underwriting or doing due diligence on the sponsor and not the actual properties. I find that investors who invest in blind pools tend to be different from investors who invest in the single asset syndication side. At the end of the day, all of this comes down to trust.

We do business with people we know, like and trust. That’s how you wrapped it all it right there. I love the fact you said that you’re doing due diligence on the sponsor or the investor, not the property. If it’s a single-family home or an apartment or a commercial deal, it’s the people, the processes and the property for me. I’m going to invest my money with the person. If everything falls in line, the last thing I look at will be the property. I have these little pillars. If somebody hasn’t done at least ten deals, never loaned to them. That’s what hard money lenders are for.

That’s why they charge 15% in three points here in Texas because they’re taking on the risk of you not knowing what you’re doing and that they have to come in and take over. Whereas from a private lending perspective, I’m lazy. There’s a reason why I’m not as active and as reactive as I want to be. It’s because I’ve got other things going on, but I still want to invest. Private lending fits for me. The last thing I want to do right now is to go evict the dentist that didn’t pay the rent on the second floor. I have to deal with, “Are we going to go to the LED bulbs? Are we going to go with the fluorescent?” All the stuff that I see the guys at the management in my building where I work go through every day.

I’m like, “Just give me the check at the end of the month. I’m good. Give me the cashflow.” Back to the whole trust thing, the little thing I love about real estate and private lending is that social, human element to this all. This is where I want to get into where you’re breaking new ground with what you’re doing. I want to turn it over to you. I’m no longer a private lender. All of a sudden, I have all this knowledge, I’m going to be a sponsor and I’m going to go buy a commercial building. How do you help me with all of the securities and everything?

You can be the person who’s buying the commercial building, or you can be the person who started the private money fund. Securities laws are complex, but I also don’t think it’s that difficult to actually be compliant. Generally, it’s a couple of things. When we talk about, “How do we comply with securities laws?” 99% of private capital in the US is raised under one exemption and that is Rule 506(b). There’s a whole ton of other federal exemptions. There’s a ton of state exemptions, but the vast majority of capital in the US use one law. What Rule 506(b) says is you can take as many accredited investors as you want. Accredited investors are rich people. You can take up to 35 non-accredited investors. Non-accredited investors are people who aren’t nearly quite as rich.

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Those non-accredited investors, you have to have a preexisting relationship with them. They can’t be like Joe Schmo walking off the street and you just met them. They have to be sophisticated. What that means is they have to understand what they’re investing in. It can’t be a grandma and her last Social Security check. They have to understand that there’s a risk of loss. The next thing that you should know is we are limited in how we go out and find these investors. The general rule of thumb is you cannot advertise or we call it general solicitation. You can’t advertise to the world the fact that you’re selling this security.

You can’t go on Twitter or LinkedIn or whatever and say, “I’m raising $5 million to lend out in private money loans in three different states. Come invest in my funds.” You can’t say that. There are things that you can say, but it has to be very vague and nonspecific. The moment that you talk about advertising, you no longer can use Rule 506(b). You should be using one of several other rules that aren’t nearly as popular for various reasons because it’s not as easy to use. Those are the biggest things. The last thing I’ll generally say is don’t commingle funds. It’s never a good thing. Do not treat the business bank account as your personal bank account because when you’re doing that in a regular business, it’s already bad.

When you’re doing it in the securities context, that’s called fraud. We definitely do not want to do that. In terms of what the process looks like and what paperwork you need, the rule of thumb is if I am taking only accredited investors, only rich people, I don’t need the full gamut of documents. Although it’s the best practice and even the large institutional funds will go get the full gamut of documents because they’re very protective. If you take so much as one non-accredited investor, then you need the full gamut of documents. It’s actually not just a recommendation, it is an SEC requirement. What are those documents? That is what we call a private placement memorandum or PPM for short. Some people call it an offering memorandum. It’s a subscription agreement.

Typically, you’re going to have some LLC documents. It will be the operating agreement or the company agreement then to the extent that you have foreign investors, you might have some supplemental foreign investor questionnaire. After that, there can be a couple of other documents, but it’s a very case by case basis. The most important document is the one I mentioned first, the PPM. That is massive, very difficult to read, sometimes it’s a 40 to 100-page document. It’s like legal garbage in one document that talks about every single risk that the investor might possibly encounter. The reason it does this is that you have to disclose everything in securities laws. If an investor comes back and says, “You didn’t disclose this,” then too bad, they have grounds to sue you.

That’s why these documents are obscenely long. What does the process look like? I’ll tell you about my process. Typically, I’ll do a quick consultation to qualify the potential client and make sure that I actually am in the business of doing what they want me to do. I get leads all the time of people who want me to do other things. I’m generally not interested in that. First, we qualify the client and then if there’s someone that I can serve, then I will send them an engagement letter to sign digitally. My process is that I send them an online questionnaire. It’s like TurboTax for real estate securities.

The whole reason I do this is that I use a bit of technology to cut down the number of hours that I have to spend as an attorney drafting these documents. The client goes in, they fill out the questionnaire to the best of their ability, then we have a follow-up appointment. TurboTax even does this now, but bad input is bad output. A lot of times people don’t necessarily know. I always want to make sure that I go through the entire questionnaire with the clients. I help them fill out everything, anything that they skipped over. I might answer questions in case they didn’t know how to answer a question or didn’t know what to decide. I will then ask for a couple of documents, LLC entity formation papers if they already have them or if not, that’s fine. We form it for the client.

I try to turn around all those documents in three business days. If it’s a little bit more complex, then it might take a little bit longer. It’s the regular back and forth attorney-client process where the client reads it, they provide comments, feedback, they ask for changes and we go through however many drafts we need to go through before they’re finalized. I finalize them and I deliver them to the client. This entire time, the client has gone out to talk to investors. They hadn’t collected any checks yet because no documents have been signed. They’ve been queuing up the investors and getting them ready. They may have presented a deck to the investor already. Maybe they have verbal commitments.

They move on to the stage of the legal docs are ready. “Please sign the legal documents and send me the funds.” Once the sponsor is done raising the money, then they have to come back to me or whoever the attorney is. For me, they fill out a spreadsheet that tells me how many investors they got from different states, how much they sold in that state and small details like that, then I have to go and do two different types of filings. One is a federal filing. I file something with the SEC and that’s called a Form D. It’s a free filing. No one has to pay anything for it. I then have to do a state filing in each state from which they have taken an investor.

From every state with a lender is you’ve got to file at any state.

It’s not necessarily the lender, but the investor. If they’ve got a hundred investors from California, I file once, but if they got one investor in California, I still have to file once. The filing is not a big deal. Honestly, the only reason we have to do it is that this is a way that the states make money. It brings in revenue for them. Here’s the thing. If you use a state exemption for your securities offering, then you’re only allowed to sell the security in that state and the state has authority. Under the rule that I mentioned, 506(b), that rule has what we call a federal exemption. That means the federal government takes precedent here and the states aren’t allowed to do much. It’s almost like an exchange for giving up all that power and authority to regulate. They’re like, “At least pay me a fee.” The states do still have a little power, but you’re just dealing with the SEC at this point.

PLP 66 | Private Lending

Private Lending: Securities laws are complex, but it’s not that difficult to actually be compliant.


The state filings, we call them blue sky notice filings. It’s not a whole lot of money. Some states it might be $30, $100. There are a couple of states where it’s a little bit more. Texas has a sliding scale and the maximum that you pay is $500. It’s not terrible, but you can certainly minimize it to the extent that most of your investors are coming from one or a couple of states. If you go and get one investor in ten different states, it’s a little bit less efficient. That is in a nutshell. The entire process sounds a lot more complicated than it is. A client usually is not involved very much with the federal and the state filing processes at all. They don’t have to do much for it. It’s the upfront paperwork that we want to make sure is right. Everything else, I help them do that.

Once it’s up and running, you’ve got all the paperwork in and everything’s filed, everything is disclosed, everything signed. Are you pretty much out of the game at that point? Is your work done or is there anything where you would get back in?

Usually I am, but afterwards, sometimes clients do come back to me with certain questions. I charge a flat fee and I say it’s for the lifetime of the deal. I had a client come back and say, “I have a question about the distribution structure. Are we supposed to do it this way or this way?” Generally, there aren’t too many questions after we finish that entire process. After that is when I would say that the CPA or the bookkeeper, whoever’s doing your accounting and your taxes becomes much more important. They’re the ones who help you on the distributions, the tax withholdings, the K-1’s if you have to give them to investors, stuff like that. That’s stuff I don’t do.

That’s another thing I’m going to go back to you. I wish I would have written it down. You’re talking about the PPM and the legal mumbo jumbo. You do this across any state then, all states. You’ll file in behalf in all 50 states.

I am a federal securities attorney. If someone’s coming to me to do an offering under state exemption, I do not do that. I will say go find an attorney in your state. If they are coming to me and they want to do securities offering under a federal exemption, then I can do that. That’s across all 50 states, correct.

You do crypto as well. You’re in the crypto space, which I’m not, but I wanted to mention that to the audience because you have your own podcast on cryptocurrency. You can go ahead and plug it.

It’s called the Law & Blockchain Podcast. It’s more about blockchain than crypto because it’s a very distinct thing. It’s very interesting. In 2017, there was this crazy industry that exploded called ICO, Initial Coin Offerings. I had all these people calling me up and being like, “I want to sell an ICO.” I did not take any of those clients because that’s securities offering. They thought they had invented a new way of raising money that was completely unregulated. That was certainly not the case as the SEC has come out in full force now and clout that notion. More capital was raised in 2017, 2018 in ICO’s and venture capital. It’s crazy. There are a lot of weird and novel intersections between law and legal theory and blockchain. I have a podcast that explores all of that.

I’ve gotten a few coins. “Give me your email, I’ll give you ten coins.” I’m like, “These are going to be worth nothing.” I’m not putting any money into it because I take more the Gary Vee approach. I’m not going to talk about it unless I can, unless I have some experience and competence.

It’s honestly better not to talk about it because everyone in the space is getting sim hacked right now. They look at their phone one day and it’s out of service and it’s because someone’s gone to Verizon or AT&T and imported their phone number onto a different phone. They reverse hacked and they get access to emails, social media and people’s crypto exchanges. Many people have been wiped out of massive fortunes from sim hacking. It’s crazy.

That’s a topic I didn’t even know we’d get to, but I’m glad we did. That’s nuts. At some point, I’ll have you come on and talk about blockchain and what it is in its most basic form. I read the white paper that came out for the bitcoin whenever it was. I consider myself a smart guy. I made it through college. By hook or by crook, I got out of college. I need a little more time to wrap my head around this computer and that computer are going to validate this transaction. I’m like, “What about if I bought a house and I want to take it to the county clerk? I want it filed. I want it on microfiche.” That is something that I would love to explore. This is going to sound funny, but even though I don’t understand it, I have a feeling it’s going to revolutionize the way we do real estate and other things. I understand Cook County, Illinois is already using it at their county clerk level. It’s here. The iron horse is here to make everything better for us. We’ll see what happens.

Many people have been wiped out of massive fortunes from SIM hacking.
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The nice thing is if real estate title and liens were put on blockchain, then we wouldn’t have as many issues around fraud or around titles or people going and getting second liens when they’re actually prohibited from writing stuff like that.

You’ve talked about the 506(b) and the 506(c) as long as the people, you’re not advertising and they’re accredited. This is one question I had from a lending perspective. Correct me if I’m wrong, but I understand that the investor has to be compliant with the securities law. As a private lender or someone who’s participating in a syndication, outside of the document subscription agreement, the PPM and any of those documents that you mentioned, is there anything else as a lender I can make sure my sponsor keeps doing everything above board?

Hopefully, they actually have an attorney as opposed to downloading something online and trying to edit it themselves, which is a pretty bad idea for PPMs because PPMs can be structured in all different sorts of ways. You want to make sure they’re doing this the proper way and not just making it up.

Check in with the attorney and maybe speak with them or like, “I’m a real person. I’m helping with their securities.”

I don’t talk to the investors of my clients, but people will ask my client, “Who’s your attorney on this deal?”

Does your name show up on the PPM that it’s prepared by your firm or anything?

No, it does not and it doesn’t need to. For your average layperson, if they see a PPM, they probably wouldn’t be able to tell whether it was drafted by an attorney or not. Usually, it’s good enough to say, “Who’s your attorney on this deal? Send me their LinkedIn profile or something,” to make sure it’s a real person.

There’s nothing wrong with a little cyberstalking. It’s a little usury amongst friends. It’s fine. It’s due diligence and verification. There’s a famous quote, “Trust, but verify.” Don’t trust, always verify it. Don’t even take anybody’s word for it. How do people get ahold of you? If I want to put it together a syndication and need some help on from a federal level, how can we get hold of Amy?

I’m on all the different social media channels. LinkedIn is a good way to follow me. The website is I’m also on BiggerPockets. I’m on Twitter, @AmyYWan. I lurk in a lot of different groups on Facebook, Telegram and all these different social media channels. I’m sure people will find me one way or another.

It has been an honor to have you on. Thank you for keeping it simple to where at least I can understand things that’s not always easy.

PLP 66 | Private Lending

Private Lending: If you use a state exemption for your securities offering, you’re only allowed to sell the security in that state, and the state has authority.


I’m happy to be here.

One thing we talked about is to all my Private Lenders out there and my single-family people, do not contact Amy to write your promissory note or your deed of trust. Leave that to your local state attorney, but anything securities, by all means, please do reach out to Amy. Show her some love and give some business. Thank you so much and I look forward to talking to you about blockchain in the future. Take care.

I want to thank Amy Wan for coming on the show and sharing her time, her thoughts and her wisdom. She’s been on my watch list before I even started recording the show, when it was just an idea. I heard her on a podcast and I wanted to get her on. Having her on is another huge deal and another big day for your not so humble narrator and host. I’d also like to thank a gentleman by the name of Bill in Tennessee who reached out and suggested I do an interview with an SEC attorney. That is what set me on the path to finally interviewing Amy. Thank you, Amy. Thank you to Bill in Tennessee for making this episode possible.

This show is completely free of charge, but I do ask that you pay the price and that price is this. If you find any value in this episode, please tell someone and share this with them. Help us spread the word so others like you and I can find the show and they can listen and learn from my mistakes, which is what I’m trying to impart. Connecting with others and then letting them know about the show, I would greatly appreciate it if you could do that solid for me. On our last episode, I suggested you listen to Andy Frisella and his The MFCEO Project. I hope that you checked it out and found something of value from it. I hope I don’t lose anybody. He doesn’t hold back cusses like he’s from the oil field or he’s a sailor and that’s the in vogue. It’s more acceptable these days. I try not to cuss on the show, although I do from time to time and he doesn’t have that filter, he doesn’t care. That’s part of his charm and part of the value there for me.

I think I’m going to suggest another podcast for your listening pleasure and I thought about it. I’d like to give you a little teaser, but I don’t want to give anything away, but also, I don’t want to build it up too much. All I’m going to say is that I have a lot of time for the host of next podcast suggestion. I’m not going to lie. It’s a bit of a curveball, kind of like Andy, another curveball. I’m coming right at you throwing junk. My coach says I’m too young when I messed up my elbow. I’m going to throw the curve boss. We’re 66 episodes in, I should be able to take down some of my barriers, show vulnerability, but also start throwing some heat and some of some curve balls.

I might lose a few audiences. As I said on episode one, this is a big experiment, so we’ll see where it takes me and us. You can connect with me on social media. I’m on Facebook, Instagram, Twitter, LinkedIn and BiggerPockets. Links to all of those channels can be found at Thank you for your time and consideration. Please keep reaching out to me. I’m very slow on responding to emails, but I really do appreciate all the feedback that I receive. It means more than any words I can say. Besides good health, happiness and self-awareness, I wish you all safe and prosperous private lending. I’ll catch you on the next episode.

Important Links:

About Amy Wan

PLP 66 | Private LendingAmy Wan, Esq., is Founder and Chief Legal Hacker at Sagewise, a project of Bootstrap Legal. Sagewise aims to build a dispute resolution infrastructure for smart contract disputes. Amy was previously a Partner at a law firm and general counsel of a real estate crowdfunding startup. Amy is also the Founder and Co-Organizer of Legal Hackers LA and served as a Presidential Management Fellow. Go to to learn more.


  • A frequent speaker at events like SXSW, PLI, ACMA, NAPABA, etc.
  • Established industry thought leader, Senior Contributor @ Crowdfund Insider
  • Original General Counsel of real estate crowdfunding platform that raised a $23.6M Series A
  • Finalist for GC of the Year by LA Business Journal
  • Pioneered novel financial products for 2+ fintech companies
  • Named Top 10 Women to Watch in LegalTech, ABA Journal
  • As a PMF, Served on multiple U.S. delegations to the WTO; assisted USTR in ongoing trade agreement negotiations; organized Business and Human Rights roundtables for State Department; organized the U.S.-China Transportation Forum, a Deputy Secretary and Vice Minister-led forum for the U.S. Department of Transportation.

ABA Journal: 10 women to watch in legal tech: Amy Wan


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About the author, Keith Baker

My ultimate goal is to create an economy for Real Estate (and other) Investors where banks are no longer needed. An economy where every day people look to each other for leverage and support. During the day I am an insurance adjuster for the oil field, where I handle millions of dollars of other people's money (OPM), and by night I invest in Real Estate and host this podcast. I hope you have an excellent experience and find real value within this website and the Private Lender Podcast. Please leave comments or submit your questions on the Contact Page.

I wish you prosperous, safe and happy lending and investing!

Thanks for listening


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