Legal: Selling Securities to Non-Accredited New Mexicans!

[Marc C.]

Did you know that New Mexico has one of the most accommodating securities laws in the country? Under the 202X exemption, investors can raise up to $2.5M from non-accredited New Mexican investors if the funds will be invested mostly in New Mexico. So, once the offering is approved by the state securities division, one could sell, say, $10,000 interests in a project to the general public, and ADVERTISE IT. This would allow the general public, instead of just rich people, to participate as passive investors in earning above-bank returns and all of the other benefits of RE ownership. That's very exciting. Legal costs for preparing the offering have been estimated to run about $10,000. 

What's interesting is I found only one example of someone in the state doing this recently for real estate (a debt offering, where the sponsor was selling debt securities which he was going to use to pay down his commercial mortgages). 

I'd really like to explore this as a way to democratize ownership of larger investment properties. 

From: http://www.rld.state.nm.us/uploads/files/Small%20O...

The 202X is a state exemption (Statute 58-13C- 202X) that permits general solicitation. The total offering, including interest on installment payments does not exceed $2.5 million. There is no limit on the number of purchasers; however the following conditions apply: The issuer’s principal office, or principal place of business or a majority of its employees or assets must be located in New Mexico. More than one-half of the offering proceeds must be used in New Mexico. An offering document must be delivered to each prospective purchaser prior to sale, disclosing such information as the Director requires; and Notice and the payment of $350 fee must be filed with the Director ten (10) days prior to the first offer. Because there is no corresponding provision in federal securities law, 202X offerings are usually limited to New Mexico residents. 202X offerings do not have to meet the substantive standards that are applied to registered offerings; however, resale of such securities is restricted.

Keywords: Albuquerque, Santa Fe, Roswell, Clovis, Las Cruces

[Jeff Greenberg]

@Marc C. I understand that California has a similar law, but watch out for the gotcha.  Don't cross the state line with the asset or the investors.  Even if New Mexico is OK with it, IMHO the feds will not see it that way.  Keep everything in the state.

Good investing.