Syndication Timeline: LOI to First Investor Wire

An apartment syndication does not move in a straight line. It moves through gates, and each gate has to clear before the next one opens. The first gate is the letter of intent and earnest money deposit, and the first money from an investor should not arrive until the offering documents are signed. If you are the sponsor, DoorRaise runs the raise, the documents and the escrow for buildings with 5 or more units, but the purchase timeline is set by your contract and your lender.

This guide follows one deal from the letter of intent to the first investor wire. For the deposit itself, read earnest money and the letter of intent. For the cash you need before the raise closes, read how much money to start a syndication as a sponsor.

Gate 1: Letter of intent and earnest money

The letter of intent sets the price and the main terms, and the earnest money deposit shows the seller you are serious. Confirm the deposit amount, when it hardens and the diligence deadline before you sign. Everything after this depends on those dates.

Gate 2: Due diligence

Diligence is the window to inspect the property, review the rent roll and operating statements, check the title and survey, and confirm the lender will fund. Set a calendar date for the end of diligence. If the work cannot finish in time, ask for an extension before the deadline passes, and price the cost of the extension first.

Gate 3: Financing

Most apartment purchases use a loan. The lender reviews your business plan and the property, issues a term sheet and then a loan commitment, and sets its own conditions and dates. A financing contingency protects your deposit if the loan falls through, so make sure your contract has one when you need it. Our bridge loan vs agency loan guide explains two common structures.

Gate 4: Entity and offering documents

Before you raise, the deal needs a company to own the building and documents that describe the risks, fees and terms. These usually include the operating agreement, the private placement memorandum and the subscription agreement. Our guides on the operating agreement, the private placement memorandum and the subscription agreement explain what each one covers. On DoorRaise, the LLC, standardized investor documents, escrow account and deal page are set up when you submit the deal.

Gate 5: Open the offering and check investors

Once the documents are ready, the offering opens to investors. For a 506(c) raise, every investor must be accredited, and you must take reasonable steps to verify it. For a 506(b) raise, investors must have a substantive relationship with you and the rules on who may invest apply. Our accredited investor verification guide covers the verification step.

Do not accept money from anyone who has not signed the subscription documents. An investor who wants to commit signs first, then funds.

Gate 6: Investor commitments and the first wire

The first investor wire is the first real money in the deal. On DoorRaise, that money goes into escrow in the deal's name and stays there until the closing conditions are met. The escrow holds investor money with an independent party, not the sponsor. See escrow in a syndication for what investors should ask about it.

Two dates matter here. Form D is due within 15 calendar days after the first sale, which is when the first investor is irrevocably committed to invest. Your offering also needs a deadline and a minimum before any money moves to closing. Our Form D guide and minimum raise guide cover both.

Where deals stall

The deposit hardens before diligence is complete, because the deadline was missed.
The loan commitment arrives late, after the diligence deadline.
The offering documents are not final, so investors cannot sign.
The raise falls short of the minimum and there is no plan for it.
The sponsor starts raising before the entity and documents exist.

Each of these is a date problem. Write the deadlines down and check them each week.

Trade-offs and who should wait

If your lender or your property team cannot commit to dates, do not open the offering yet. Investors who see a deal "under contract" with no firm closing date are more likely to ask hard questions, and a stalled deal damages your next raise as well as this one.

How DoorRaise fits in

DoorRaise isn’t open to the public yet.

Built for apartment buildings with 5 or more units: one link for the deal, escrow until closing and a standard fee card.

When you are ready to open the raise, create your sponsor page or see the fee card.

FAQ

How long does it take to get from a letter of intent to the first investor wire?

There is no standard length. It depends on the diligence period, the lender, the documents and how quickly investors commit. Set your own calendar from the deadlines in your contracts.

Can investors wire money before the documents are signed?

They should not. Investors sign the offering documents first, then fund. Accepting money before that step creates a problem with the offering.

What happens to investor money if the deal does not close?

It is returned from escrow under the conditions the offering describes. Read the escrow terms before you invest.

Do I need an attorney for this?

Yes, a securities attorney and a CPA should review the offering and the purchase contract before you sign anything. This guide is general information.

Sources

This article is general information, not legal, tax or investment advice. Timelines vary by deal, lender and market, and the steps here are examples, not a promise of when any deal will close. Talk to a securities attorney and a CPA before you sign a contract, raise money or accept an investment. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.