All Forum Posts by: Jeff S.

Plus one for Bryan. To further quote Howey, “The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others."

Thus, it’s not about advertising, it’s about who controls the money.

While I hardly think Jason, that it’s necessary to spend 15 or 20 grand to file a Reg. D Private Placement Memo if your brother gives you 20 bucks to invest, but strictly speaking, you’re obligated.

A public offering allows you to advertise. A Reg. D Private Placement Memo, which generally applies at the small investor level, allows you only to approach qualified investors with whom you have a pre-existing relationship. In both cases, the rules are strict.

Reg. D generally doesn’t apply if the investors have 50-50 control with you or their money is a loan secured by a note and DOT.

Nor does it matter if you take money from your Mom. If you control the funds, the security rules apply.

Private investor ready...what’s the first step? Answer: Contact a lawyer.

Sorry if this is not what you guys want to hear.

Jeff

Be careful Sagnik. I don’t know what you mean when you write “strictly on an investor level.†If this investor has no control of the deal and is investing money passively for an expected return, specified or not, then you’re really selling a security. In this case you have to comply with a whole host of SEC regulations and it can get very expensive very fast involving various disclosures and registrations.

A good rule of thumb to follow is that whenever someone raises money from private investors and then makes decisions on their behalf, a Security has been created and the SEC rules apply.

You might not need as much as you think, James. You bring a substantial skill to the table that’s also worth money. Instead of buying and rehabbing, you might initially consider partnering with someone who finds and buys the deal. They would locate and buy the property and you would fund and manage the rehab. Then, you split the profits. This will initially save you money.

Flippers are always looking for reliable contractors. Do what you do well as you learn the other parts of the business and save the funds necessary to buy on your own.

The standard answer about where to find other flippers is at real estate clubs. In your case, I’d also ask the local building departments which homes are being rehabbed in your area. From there it’s easy to locate and approach the owner (i.e. the flipper).

Jeff

In my view, not getting on an airplane, visiting the property, and driving the neighborhood is the biggest mistake any real estate investor can make. I know more investors than I’d like to count who are still in trouble with out-of-state properties they’re underwater on that they still haven’t seen.

The best money I never spent was for a few long weekends driving around Florida and Ohio in early 2007. Saved myself a fortune.

All the hype and sale tactics never seems to match the properties and I consider myself lucky for doing what I consider the minimal amount of due diligence.

Mike's “collectible market rent†is just the prevailing rent for your type of home in the area. That is, the amount you could rent your property for. You obtain this by doing a rent survey.

You do a rent survey by calling property managers, searching Craigslist, local newspapers, driving the area looking at for rent signs, and however else rental properties are advertised in your area.

I’d suggest that since you have a specific property in mind Peter, you do a detailed cash flow analysis by obtaining actual expenses and rents instead of using this rule-of-thumb. It will better define the performance of your investment.

This thread was started by a member here who was scammed by two other BP members. The discussion focused on a way to “out†these people and warn others by suggesting a “Hall of Shame†or ranking system for BP members you do business with.

Due diligence on your business partner is as important as due diligence on a deal. Rather than hijack the thread, I thought I’d start another and ask how you protect yourself before you decide to do a deal with someone you don’t know. I’m not talking about the property or the neighborhood. I’m talking about the person.

I’m a bit stumped here.

How can Loopnet list off-market listings?

I’ve been on both sides of this coin. Don’t consider any of it just boilerplate. While parts might be unlikely, and others unenforceable, you don’t need the headache or expense if anything bad occurs.

Assuming this is not a strict NNN lease; my argument against these clauses is that you’re leasing the premises and all relevant mechanical systems, not buying them. You expect everything to be of high quality, safe, maintainable, and in good working order. In the past, I’ve agree to pay for such things as quarterly HVAC maintenance and to make minor nuisance repairs. I’d never take responsibility for any common area issues or to replace entire systems. And I’d certainly not take responsibility for the building structure. That’s crazy. This is why you lease.

Sometimes hiding behind a lawyer letter lets the landlord know it will be difficult to bully you. As always, in cases like this I suggest you invoke Nancy Reagan and “Just Say No.â€

I like Dr. Housing Bubble and Patrick.net.

Though slanted towards California real estate, Dr. Housing Bubble provides great data analysis.

Patrick.net provides some commentary, but is more of a real estate news aggregator.

...

Disclaimer: I have no relation to these sites and hope they are legal references here. (How am I supposed to know?)

I’m not sure what state you’re in William, but there is no law I know that makes it illegal to discuss financing without a license. Our first amendment would prohibit this law. Even in ultra-consumer friendly California, a “civilian†can write a note secured by real estate so long as it does not violate usury. There are limits to how many, but it is not illegal.

Is this a legal paper, a scholarly paper, a term paper? How about a paper on the history of usury and lending? It’s actually pretty interesting if you go way back to St. Thomas Aquinas and follow up with the Medici, the Rothschilds, etc., and then take us to modern day post-recession law.

As long as you’re writing a paper, please take heed of your punctuation and have it proof read. Do you realize you wrote two run-on paragraphs without the use of a single period?