Hi all. I am in the process of raising money for a apartment building that I have under contract.
What I do is go out and find a great cash flowing property and then look for equity investors who want to make a great return on their money and marry the two together. As an equity investor, one shares in the cash flow and appreciation of the property. Also the investment is secured by real estate. Being a certified public accountant (CPA), I dissect the financial operations of the building to make sure my investor returns will be met.
I have been contacting family, friends, and other various professional contacts I have, etc. to share opportunity with.
Question: Any suggestions on how to increase exposure to this opportunity such as presenting deal on a website to locate equity investors?
Well Brian…I think you’ve actually done that by including your email address here. How’s this working out for you? Are you able to make your deadlines before contract expiration or are you getting a bad name around town as someone who puts things under contract, but can’t close the deal? I’ve heard of some people trying things like this, but I always like to make sure I have everything in place for financing before I place something under contract. It means a lot to have a reputation of someone who will definitely close the deal.
Justin, good question and I agree that reputation is everything in this people. I just went under contract and have 90% of the money, just looking for the remaining. With a long due diligence period, I feel comfortable that the remaining small piece will come in. I have a couple fence sitters also.
Curious what outlets you may have used to get your financing.
We only have financing with local banks. No other partners. No private money. It’s a pretty plain vanilla approach to REI, but my wife and I retain complete control of our business.
You may want to search some posts in here and also the legal forum regarding investment offerings and the SEC.
As a CPA this gentleman has more latitude under the law! Offers created as prospectus are generally distributed and circulated by CPA's, Investment Advisors and Financial Managers.
A real estate based deal falls under the REIT or Real Estate Investment Trust guidlines rather than securities. Although the SEC does oversee offerings, a small REIT falls under an exclusion like a 504, 505 or 506 unregistered offering.
As long as the REIT does not exceed the monitary amounts or the accredited / non-accredited guidelines for the money raised and distributes 90% (I believe) of positive cash flow back to investors he does not break any laws.
But I would guess since he is a CPA, he probable knows this already.
GR, you are correct, this falls under a private placement offering and excluded under the SEC. I focus on accredited investors who make a certain income a year or have a certain net worth.
My search continues to add more accredited investors to my contact list, which prompted my original post.