OfflineHello:
I have posted several very good articles on Private Money today. Why am I doing this? because there is a tremendous level of bad information going around on this forum and other places and I thought it would be a good idea to talk about it.
There are pitfalls to using private money and you must know how to play the game and it very much is a animal that can either be very good to you or very bad to you.
Lets talk about what private money is and I will then explain to you how all the rules come into play and the underlying reason why the rules are there.
Private money is monies from a private individual or entity to an individual or entity for the purpose of making an investment.
The rules come into play because these are monies from a private individual or entity to the same to be used in a invesment for the purpose of making money and because there is a possibility that a loss can happen, it is possible that the individual who provided the money did not understand that a loss can occur, because some people just are not astute enough to understand this very real fact of life, so this is now where for certain types of investments, you must be what is known as and referred to as an accredited investor.
To make this simple to define, an accredited investor is a professional investor. They have met certain criteria and because of this, they have the right to invest in certain types of opportunities that are deemed to be high risk and financially they can whether the storm so to speak.
Now I am getting into advanced stuff and I know that, but if your going to do this, you need to understand some things.
Now can a private individual such as a former school chum say to you, oh yes I can provide those funds to you to buy and flip that home, who do I make the check out to? of course they can and do they need to be an accredited investor? no they do not.
I have been involved with Regulation D, Private Placement Memorandums, Hedge Funds and I have seen the good and the bad, but if you do it right then you have no worries.
Marty- The information you have posted here is excellent. Unfortunately, from my reading in detail of the last 3 months forum posts, 95% of all discussions in this area has been wrong. It is a great service you have done today by pointing out the basic premise of securities laws and their interaction with real estate. (Thank God we all don't live in that kooky state they call California. LOL) I, for one, have been hesitant to point out some of the errors (except by saying in a few posts to be careful, etc) as I certainly didn't want to accused of paraticing law without a license. But with your background, you have the perfect opportunity to do it right and I am glad you did.
Running a 3 state public accounting firm and now a multi-state real estate firm has allowed me to see the crazy things that can happen if you don't follow the laws. If you don't, it probably won't affect you when things go perfect because no one (your investors) complains, but if they do go wrong; hold on to your butt for the ride of your life.
So for what it's worth, I want to emphasize with Marty that you need to pay attention when you start dealing with private money as it has rules you need to pay attention to for your own safety and security (no pun intended).
Always Looking to Acquire Houses | Always Looking to Amaze Investors
You both put great information out there, hopefully people will start paying attention. I know I will. Thanks to the both of you.
Jim Kendrick
http://kendrickpropertymanagement.com/
http://rochesterapartmentrentals.com/?page_id=10
I am also very glad that you two are here.
The majority of us on here are rookies and are here to learn, so the input from people like you, who are experienced in this field, is much appreciated by me.
Thanks for taking the time.
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
I posted this on one of the other links. There are a lot of articles to read with stuff that looks intimidating and scary. Try listening to this webinar about the SEC and private lending. I share this because it makes understanding this a whole lot easier! The SEC is not something to fear.
This lady is very good, a lawyer and can help interpret a lot of these long messages.
Please do not be frightened by the SEC and turn yourself away from relational private lending. It is fairly easy to remain SEC compliant.
SEC is not something that investors need to be afraid of, but there are things that an investor needs to know so they don't violate SEC rules. It is NOT something to be intimidated by, and it is not as complicated as some of these articles seem to make it.
Syndication is another aspect of private lending, and involves pooling funds from several (or more than one investor) together to buy property and is one of the more complicated items in private lending, and has many more restrictions than a straight relational private money loan. The simplest solution is to have a SEC attorney look over all your documents, then you can use them over and over again and review them with your SEC attorney a couple of times a year. You do NOT need a broker to do a relational private money loan.
Please take the time to watch this video. (You will have to scroll down or search) http://www.privatemoneyblueprint.com/members/tag/private-lending/, go down about 2/3 of the way to where it says "SEC Attorney Spills The Beans Detailed Interview". It used to be on her website, but I can't find it there direct.
Please don't let the fear of the SEC stop you from learning about and using relational private money.
Important information for anyone getting private money . Watch the video Tammy references above and take notes. Basically, we are selling a security in real estate. Go to opmguru.com for furthering info.
Stephanie