NC PACES is here! A new method t oraise capital?

Question

In theory, NC residents should have an easier time accessing capital per the NORTH CAROLINA PROVIDING ACCESS TO CAPITAL FOR ENTREPRENEURS AND SMALL BUSINESS ACT. For NC residents looking for crowdfunding (CF) opportunities, the NC Secretary of State's office has forms, instructions, and FAQs for you to get on board with NC crowdfunding.

Anyone knowing my posts on this topic (historic post speaking) knows that I think CF and real estate investing are like oil and water. But I don't make the calls. I personally could see myself possibly initiating a CF project, primarily because the $5,000 personal limit is for non-accredited persons only per page 5 of 18 NCAC 06A .2001 Rules . In early drafts, at the federal and state level, the limit was per person regardless of income/assets. I know that was an issue for many of us and we (BP Nation) provided commentary accordingly.

One project I could see doing is initiating a NC CF project with the intent of building a public domain platform to simplify (and automate) administration and promote NC CF implementations. Talk about recursion!

I would be really interested to hear what, if anything, people plan to do now that NC CF has become a reality.

Christopher K. · Answer

Wait .. what? I wasn't trying to neg out on your original post. You said at the end of your OP that 'you'd be really interested in hearing what, if anything, people plan to do now that CF in NC has become a reality'.

As a REI in NC, I replied with my experience with CF, or lack thereof .. which I suppose I felt fell under the 'if anything' part of your ending statement asking for people's thoughts.

I also ended my post thanking you for posting what you did and saying that I'd planned on looking further into it (in large part because you brought it back to my attention) and adding that I was also interested to hear what others might have to say about the topic.

I thought I was just contributing to the conversation that you started. I'm a bit puzzled by your response to my reply.

Adam Schneider · Answer

@Chris Martin If you are interested in exploring this, and have questions related to the technical part of the process, reach out to Leo Johns at the NC SOS office. He spoke at one of our investor meetings about the mechanics, Do's and Don'ts related to this issue.

Chris Martin · Answer

Like I've said for 4 years now, as well as in the above post where I wrote:  "...I think CF and real estate investing are like oil and water..."

I should know better than to post this on a real estate centric web site. It's just an informational post.

It's like a HML loan. Don't use it if it doesn't fit.

Christopher K. · Answer

I've been flipping since 2004 and have been in real estate longer than that, and personally, I haven't had really had a problem finding funds for my deals over the years and have never been involved with any sort of crowdfunding. TBH, the first time I'd even heard of CF being used for REI was just a handful of months ago (I acknowledge that I may have been 'late to the party' on this).

I've always used a combination of HML and PMLs .. a vast majority being PMLs. When I first heard a blurb on CF on a BP podcast, I thought "Hmm..this could be a really interesting concept". And I'm not trying to necessarily say it's not. But when I did a little more research into it, I was mostly put off by what I found. Granted, I didn't do TONS of homework on it but from what I saw, the mechanics of how it worked for funding REIs appeared to be pretty much like I've always understood that it worked for anything else. You post the specifics of your business plan (or for REI, numbers on your deal, exit strategy, etc) and then wait around hoping enough people commit the funds in time for you to actually close. Ehh .. unless I'm missing something, I can't say this seems like a recipe for success to me .. I assume when you start the CF campaign, that you could then also market it yourself and try and drive raw traffic (or better yet qualified investors) to your CF page in an effort to help move things along - but once you're doing this, I'm wondering what I need the CF platform for at that point? It just leads me back to the question of - if I am able to find legitimate deals with real equity in them and am smart and/or resourceful enough to package the deal itself (and my experience) into a nice, neat, marketable package, why not go straight to the source and cut out the additional cost and time of having a middle man? This doesn't even factor in the stress of what happens if enough people don't commit to my deal in time (or what happens if they click 'commit' but some of them get cold feet and don't come through in the end? .. maybe the major CF sites have figured out how to mitigate this last scenario). If this was the only option that there was, then I'm sure I'd find a way to make it work. But it's not.

I'm always looking for ways to improve systems and strategies and streamline my business/workflow. But CF seemed like a step backwards for me in this department vs. how I already consistently accomplish my acquisition funding needs.

I wasn't aware of any recent rule changes in NC regarding CF, so if there has been, I appreciate you posting this. I probably will look a little more into it at some point and am also curious in what others might have to contribute to this conversation.