All Forum Posts by: Jilliene H.

@Cole Davis, we recently started a program for a broader scope of borrowers and sponsors.  For borrowers, as long as you have one fix and flip under your belt, we can lend to you.  

For sponsors, we are looking for sponsors with > $25 million in deal history.  We put tighter controls in our operating agreements for smaller sponsors, but we're excited about working with all types of professional, smart real estate entrepreneurs. 

What kind of leverage are you looking for? 

@Brian Dwyer I think this is possible. There will likely be tax implications you have to disclose to the investors in the PPM or Operating agreement, but I see no reason why you could not do this legally (with smart lawyers representing you!).

We're doing something similar (but different), but with a transaction we are crowdfunding right now. We're crowdfunding the Hard Rock Hotel in Palm Springs and in addition to giving investors a share of the income from the hotel and appreciation when we eventually sell or refinance the hotel, we also have "perks", including 25% off room rates, free cabanas at the pool, free room upgrades, etc. These perks are somewhat like your "option" for investors to buy condos they help finance at a discounted rate.

@Account Closed I think it depends how much capital you are looking to invest. I'd recommend you diversify -- be it a few funds, a few seperate properties, etc.

@Carla Carvalho Also thought I'd mention a tax consequence. If you are investing in equity transactions via a SDIRA, you might be subject to UBIT (unrelated business income tax). I'm not a CPA or an attorney, but most of our SDIRA clients prefer to invest in loans rather than equity to avoid this issue.

@Carla Carvalho I'm the CEO and try to be pretty active on BP. Just to clarify the legal piece, we've gone the regulated route. We're affiliated with a broker-dealer and I'm a registered rep of the broker-dealer. It's surprising to me more crowdfunding companies in real estate have not done this and I think inevitably they will.

There are always risks in every investment as @Joe Fairless mentions and past performance is never indicative of future performance, but to date we've never had a late payment on any one of our transactions. That said, investing is a personal and private sport, so all investors should analyze their personal situation and see if there is a place for illiquid real estate investments.

@Daniel Fuchs We've done this for a handful of international clients who invested on our crowdfunding website. Best to work with a legal and accounting firm that specializes in this - happy to give you a few names to call on. Once you create your entity, you get a tax ID number and then you can invest as if you were a US citizen. You'll need your firm to file taxes on behalf of the entity annually.

@Damien Dupee I think it depends on your goals! What are you looking to accomplish as a real estate investor?

Curious what folks are seeing for hard money rates around the country? I'm seeing rates come down substantially in California and wondering if it's happening in other markets?

Hi Blake,

You're going to need to set up some kind of legal structure if you are pooling money together. The most common in real estate/real estate syndication is a Reg D 506 offering but it is limited to accredited investors and up to 35 "sophisticated" investors, so depending on the net worth and income level of the people you are investing with, that may or may not work. It's typically $10k - $20k in legal fees to get this set up with an operating agreement to guide the investment / what the limited members and what the general member can and cannot do.

Crowdfunding right now is mostly limited to Reg D 506 raises (online) limited to accredited investors although there is another exemption called Reg A that has been used that allows for non-accredited investors. Reg A can be very expensive as there are substantially more filings than a Reg D 506 private placement. For your purposes, I'd rule Reg A out IMO. Yet another exemption exists in some states if you limit it just to investors in that state, so you may want to look for state specific exemptions. Georgia for example has legalized pooling capital together for non-accredited investors.

Title III of the JOBS act has been proposed, but not finalized yet. When it is finalized, you will be able to use crowdfunding to raise money from non-accredited investors, but you will have to use a third party portal or a broker-dealer. There are also limits on how much you can raise (proposed rule is $1MM), the potential for mandated audited financials (if you raise more than $500k) and limitations on how much any one non-accredited investor can invest. None of these rules are finalized yet though, so this is currently illegal.

**I'm not an attorney so don't take this as legal advice, just live and breathe the crowdfunding space.....