Raising Money From Doctors for a Real Estate Syndication: A Sponsor's Guide
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Physicians, dentists and other high-income professionals are a common source of equity for apartment syndications. Many clear the income test for accredited investors, want income that does not take their time, and have little interest in running a building. That makes them a good fit as limited partners, but it does not change the rules. You still need a lawful way to find them, a clear explanation of the risks and honest answers about taxes. This guide covers how a sponsor can approach them.
Are physicians accredited investors?
Often, but not always. An individual qualifies by income above $200,000 (or $300,000 with a spouse or partner) in each of the last two years with a reasonable expectation of the same this year, or by net worth above $1 million not counting the primary residence, or by holding a Series 7, 65 or 82 license (17 CFR 230.501). A resident or early-career doctor with high student debt may not pass either test even with a good salary. Ask, do not assume. See accredited investor definition.
How can a sponsor lawfully reach physicians?
| Situation | Exemption that fits |
|---|---|
| You are a physician or know many personally | Rule 506(b), inviting only people you have a pre-existing, substantive relationship with |
| You want to share the deal in groups, social media or a newsletter | Rule 506(c), with verified accredited investors only |
| A friend offers to introduce you | Fine to meet, but the investor must still have a relationship with you before an offer. See substantive relationship |
The SEC describes the difference: a 506(b) offering cannot use general solicitation, while 506(c) can (SEC, Rule 506(b), Rule 506(c)). Posting in a physician forum with a link to your deal is a public offer.
What do busy professionals want to see?
- One page first. A single-sheet deal summary before the full offering memorandum.
- The time commitment. Say plainly that investors are passive, how often you report and when they might hear from you.
- The downside. Show what happens if rents fall or the sale slips. See what happens if a syndication loses money.
- Fees in plain numbers. See how sponsors get paid.
- Liquidity. Make clear the money is locked up for the hold period. See hold period.
What about taxes?
Depreciation can produce paper losses, but the passive activity rules usually keep a limited partner from using them against a doctor's salary. Most can use them only against other passive income or when they sell (26 U.S.C. 469). Real estate professional status is a high bar for someone working full time in medicine. Send tax questions to the investor's own CPA, and see passive losses only to explain the concept, never to promise a deduction. See also real estate professional status.
Our take
Doctors are excellent investors because they ask good questions, but they punish vague answers. Prepare for the diligence. A sponsor who explains the downside and the fees before being asked builds more trust than a polished tax pitch.
Trade-offs and who this is not for
- Not for a pitch based on a tax shelter. It sets the wrong expectation and invites an antifraud problem.
- Not for colleagues you cannot invite privately. Use 506(c) with verification or skip them.
- Common mistake: assuming a specialist's friends are all accredited.
- Not a substitute for counsel.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings with 5+ units from friends and followers who already trust them, under Rule 506(b) or 506(c). We are software, legal document preparation, escrow coordination and verification services. We are not a law firm, broker-dealer, investment adviser, funding portal, bank or escrow agent, and we do not hold investor money: investors wire their money to escrow at Enterprise Bank & Trust, in the deal's name.
DoorRaise keeps the deal in its own company with its own documents and a deal page, and runs an accreditation check on every investor, in 506(b) and 506(c) raises. Flat fees, never a percentage of the raise (see pricing). Create your free sponsor page.
FAQ
Are all doctors accredited investors?
No. Many pass the income test, but residents and early-career doctors often do not. Check each person.
Can I pitch a deal in a doctors' Facebook group?
Only in a Rule 506(c) raise. A public post is general solicitation, so every investor must be accredited and verified.
Can a physician use deal losses against their salary?
Usually not. Passive loss rules generally limit losses to passive income or to the year of sale. Their own CPA should confirm.
Should I promise investors a tax benefit?
No. Describe the deal and its risks. Leave tax conclusions to the investor's own adviser.
Sources
This article is general information, not legal, tax or investment advice. Talk to a securities attorney and your own CPA. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.