Start with the three documents below.
01
What it is
The sponsor’s official disclosure document. It describes the deal, the fees, the risks, and the people running it.
Why it exists
Securities law prohibits misleading investors. The PPM is where the sponsor discloses everything material, which also protects the sponsor legally if something goes wrong.
Do you sign it?
No. You confirm in the subscription agreement that you received and read it.
How much is standard?
Most of it. Long stretches are legal language that appears in nearly every PPM. The deal-specific parts sit in a handful of sections.
02
What it is
The contract that governs the company you’re buying into: how money is paid out, who’s in control, and what rights you have. If the company is a limited partnership, it’s called a limited partnership agreement.
Why it exists
It’s the binding rulebook. The PPM summarizes it and usually says the full agreement controls if the two differ.
Do you sign it?
Yes, usually through a signature page inside the subscription package. Once your investment is accepted, you’re bound by it.
How much is standard?
A good share is standard company housekeeping. The money and control sections are where deals differ.
03
What it is
Your application to buy in. You state how you’ll own the investment, confirm you qualify, and make promises to the sponsor.
Why it exists
It documents that you qualify and that you understood what you were buying. That keeps the offering within its SEC exemption and protects the sponsor.
Do you sign it?
Yes. This is the document you actually sign.
How much is standard?
Mostly a standard form. What matters is the promises you’re making and the details you fill in.
Required or customary in nearly every deal. Give it one pass for anything unusual, then move on.
Cover page legends and notices: Required warnings that the securities aren’t registered with the SEC and can’t be freely resold. Every PPM has them.
State notices: Legal notices for residents of specific states. Standard.
Forward-looking statements: A disclaimer that projections may not come true. Standard, and a useful reminder that projections aren’t promises.
General risk factors: Risks that apply to almost any real estate deal: market downturns, interest rates, illiquidity, tax law changes. Skim the headings.
Federal income tax considerations: A general explanation of how the investment is taxed. Mostly standard. Your CPA is the right person for your situation.
Retirement account (ERISA) considerations: Rules for investing through an IRA or retirement plan. Only matters if you invest that way.
Who can invest and the SEC exemption: Investor qualifications and whether the offering uses Rule 506(b) or 506(c). Standard, but it tells you what you’ll be asked to provide.
2.1
Summary of terms
Locked
2.2
Sources and uses (or use of proceeds)
Locked
2.3
Fees and sponsor compensation
Locked
2.4
The property, business plan, and loan
Locked
2.5
Deal-specific risk factors
Locked
2.6
Conflicts of interest
Locked
2.7
Management and legal disclosures
Locked
Required or customary in nearly every deal. Give it one pass for anything unusual, then move on.
Formation, name, and purpose: Where the company is formed and what it’s allowed to do. Standard.
Definitions: A long glossary. Use it as a reference, with one exception: read the definitions the waterfall depends on, like “Capital Contribution” and “Distributable Cash.”
Tax allocations: Technical rules for splitting profits and losses for tax purposes. Largely standard. Your CPA’s territory.
Partnership representative: Who deals with the IRS on the company’s behalf. Standard.
Dissolution and winding up: How the company is closed out at the end. Mostly standard.
Miscellaneous: Notices, governing law, severability, counterparts. Standard.
3.1
Distributions and the waterfall
Locked
3.2
Manager powers and removal
Locked
3.3
Capital calls
Locked
3.4
Transfers
Locked
3.5
Amendments
Locked
3.6
Reporting and information rights
Locked
3.7
Indemnification and exculpation
Locked
Required or customary in nearly every deal. Give it one pass for anything unusual, then move on.
Investor information: Your name, address, and contact details. Just get them right.
Investor questionnaire: The form showing you qualify. Answer accurately. It’s a legal statement.
Standard acknowledgments: That the investment is risky, illiquid, and not registered. The same in nearly every deal.
Investor indemnification: You agree to cover the sponsor’s losses if your statements turn out to be false. Common. Just make sure your statements are true.
4.1
The promises you’re making
Locked
4.2
Accredited status: what you’ll provide
Locked
4.3
How you’ll hold the investment
Locked
4.4
Power of attorney
Locked
4.5
Funding and wire instructions
Locked
Minutes 0 to 5
Locked
The PPM: the deal itself
Minutes 5 to 10
Locked
The PPM: fees and risks
Minutes 10 to 16
Locked
The operating agreement: money and control
Minutes 16 to 20
Locked
The subscription agreement: what you’re signing
The sponsor’s track record and full-cycle results
How much of their own money the sponsor is investing
The financial model behind the projected returns
The property and market itself
References from other investors
The 20-minute checklist (printable)
The AI review prompt to use with your own documents in Claude or ChatGPT
Bonus: the Vestus investor toolkit
No spam. Unsubscribe anytime.
The two most common SEC exemptions for private offerings. 506(c) allows public advertising but requires verifying every investor is accredited.
Someone who meets SEC income or net worth thresholds to invest in private offerings.
Standard legal language that appears in nearly every offering.
A request for investors to contribute more money.
A rule letting the sponsor receive a larger share of profits after investors get their preferred return.
Unpaid preferred return carries forward and gets paid later.
A clause limiting when you can hold the manager liable for mistakes.
A deal that has been bought and sold, so the final results are known.
The tax form you get each year showing your share of the investment’s income and losses.
How much of the property is paid for with debt.
The passive investor. That’s you.
Your statement that you’re relying only on the written documents, not on anything you were told.
The contract that governs the company you’re investing in.
The official document describing a private investment offering, its terms, and its risks.
A target return investors are paid before the sponsor shares in profits. A priority, not a guarantee.
Insurance that limits how high a floating interest rate can go.
A table showing where the deal’s money comes from and where it goes.
The company running the deal and making decisions.
The document you sign to buy into the deal.
The order in which cash gets paid out to investors and the sponsor.
Find the amount you’d need invested so the cash flow covers the life you want.
Find the type of investment that matches your goals.
The checklist I use to vet every sponsor.
This page is general education, not legal, tax, or investment advice. Every offering is different. Have your own attorney and CPA review any offering documents before you invest. Nothing here is an offer to sell or a solicitation to buy any security, and it does not describe any specific Vestus Capital offering.