How to Syndicate an Apartment Deal in Alabama: A Sponsor Guide
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To syndicate an apartment deal in Alabama, you form the deal LLC (or register an outside LLC with the Alabama Secretary of State), raise under Rule 506(b) or 506(c), and file a Form D notice with a $300 fee through NASAA's EFD. Alabama's property taxes are among the lowest in the country, but an apartment building is assessed as rental property at 20% of market value, twice the rate of an owner's home, so do not borrow a homeowner's tax bill for your model.
This is the Alabama version of our general syndication guide. It covers what changes when the building, the investors or both are in Alabama. It is general information, not legal advice.
What is the Alabama Rule 506 notice filing?
Alabama treats Rule 506 interests as federal covered securities and asks for a notice: a copy of the SEC Form D and the fee, filed through the NASAA Electronic Filing Depository (EFD) for the Alabama Securities Commission. DoorRaise's state data, from NASAA's fee schedule, lists the fee as $300. File within 15 days of the first sale to an Alabama investor. EFD shows the exact amount before you pay, and that amount wins. See blue sky notice filings and blue sky fees by state.
How do you form the deal LLC in Alabama?
An Alabama LLC is formed by filing a Certificate of Formation with the Alabama Secretary of State, usually after reserving the name. Each year the LLC files a business privilege tax return with the Alabama Department of Revenue; the minimum tax is $50, and it grows with the LLC's net worth in Alabama. An LLC formed elsewhere that will own Alabama property registers as a foreign LLC. Check current fees with the Secretary of State and the Department of Revenue before you file. See forming an LLC for a syndication and keeping the LLC in good standing.
What Alabama landlord and tenant rules should a sponsor know?
The Alabama Uniform Residential Landlord and Tenant Act (Ala. Code 35-9A) governs residential leases. A security deposit can be at most one month's rent, with limited extra deposits for pets, alterations or added risk, and the landlord must return it, minus itemized deductions, within 60 days after the tenancy ends (35-9A-201). For unpaid rent, a landlord gives a 7 day written notice before ending the lease and filing an eviction in district court (35-9A-421). Alabama law also bars local rent control. Your property manager should use Alabama lease forms and follow these notice periods exactly.
How does Alabama property tax work for an apartment building?
Alabama sorts property into classes. An owner-occupied home is Class III, assessed at 10% of market value. An apartment building is rental property in Class II, assessed at 20% of market value. The tax is the assessed value times the combined state, county, city and school millage. A sale gives the assessor fresh evidence of market value, so underwrite taxes from your purchase price at the 20% ratio and the local millage, not from the seller's bill. See property tax reassessment in apartment underwriting and appealing property tax on an apartment building.
Does Alabama tax the deal LLC or its investors?
Alabama taxes income earned in the state, and a pass through entity may have to file a composite return or withhold for nonresident owners. Several Alabama cities, including Birmingham, also levy an occupational tax on wages. Ask your CPA early; the investor side is in state tax returns for nonresident syndication investors.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings from their friends and followers under Rule 506(b) or 506(c), and verifies that every investor is accredited before they sign. Investors fund by wire into the deal's escrow account at Enterprise Bank & Trust. By default DoorRaise files the notice in the property's state; on new deals, the first investor from another state pays that state's filing fee by card when they sign, later investors from that state pay nothing, and the sponsor never fronts it. Sponsors pay a $1,500 setup fee (non-refundable) and a flat $5,000 a year administration fee; see pricing or how it works.
FAQ
How much is the Alabama Rule 506 notice fee?
$300, per NASAA's fee schedule. EFD shows the final amount before you pay.
What yearly filing does an Alabama LLC have?
A business privilege tax return with the Department of Revenue, with a $50 minimum tax.
At what ratio is an Alabama apartment building assessed?
20% of market value, as Class II property.
How long does an Alabama landlord have to return a deposit?
60 days after the tenancy ends.
Sources
- Alabama Securities Commission
- NASAA: Form D fee schedule
- Alabama Secretary of State: business entities
- Alabama Department of Revenue: business privilege tax
- Alabama Department of Revenue: property tax
- Code of Alabama, Title 35, Chapter 9A
This article is general information as of November 2026, not legal, tax or investment advice. State laws and fees change: confirm with the state agency and your own attorney before you file. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.