Hello everybody this is Don. I posted this in the wrong section of this site, can someone just please confirm this?
I am entering the REI Industry as a birddog of some sorts, and I am helping an Investment group find more investors with capital to invest in REI and also find guys with potential deals that are looking to obtain capital.
Everything is in California. But guys I don’t have a license in Real Estate or anything, and this Broker firm said they would pay me money from the leads I bring in.
I just want to know, is this legal?
The guy in the other part of this forum said it was, because I would be getting paid a Finder’s Fee…but can someone please confirm this? I just don’t want to be fined like $250,000 for a deal that I only got paid $2,000 on.
Sounds like you’re talking about trying to find both people with money to invest as well as people who need capital.
You need to be very cautious here. Finding people with money to invest puts you in the securities business. You are looking for people who have money to invest, and that’s a highly regulated industry. Yes, there are loopholes and all that, but it’s easy to get on the wrong side of the law. (I still have my love letter from the State of Maryland Attorney General to remind me.)
As for finding people who need capital, that puts you in the mortgage brokerage business. Ten or more years ago, there were still states that you could do this without much of a license. Today I am pretty sure this is also a regulated business.
If you are looking to really play by the rules, I’d make a few phone calls to the correct offices.
Does this mean that you can operate, at least for a little while, under the radar? Probably. People do it all the time. But believe me…once something goes wrong and someone gets pissed off, they will use every means under the sun to shift the blame elsewhere.
The one constant in the world is that “it” still runs downhill.
Tread cautiously.
Essentially instead of birddogging for homes you are birddogging for capital and investors that need capital. I have sold a couple of investors like someone would normally sell houses. In some cases, I like selling investors better than selling homes because investors will many times keep buying and you keep making money without doing any work other than finding them. One of the guys I wholesale to, will pay me 3-4% for every home that a buyer I send him buys.
If you are looking to get around laws regarding getting paid for such work you might think about setting up a website that does advertising for the companies that intend to pay you and have them pay you advertising money rather than birddogging money. If it did get reported and made it to court you would have a much better chance of not being in trouble if you could provide proof of the service offered (your website and paper work to back you up). Just a hought, I havent had to do it as I am a realtor, but if I wasnt then I might do something like that.
All of this is fine and dandy as long as everyone is happy. When someone loses money, though, or just plain gets upset about something, believe you me, one of the first calls they will make is to a lawyer to find out about who can be sued and on what grounds.
Just sayin’…
If you are going to be advertising for investors then you need to have the proper paperwork filed with the SEC.