All Forum Posts by: Sean H.

I agree with Robert Steele, check out United States Liability Insurance Company. They will be able to help you.

At the end of the day, you will have to pay for proper asset protection. Not only for the entity setup, but also in your time to make sure everything is properly maintained and accounted for.

I would think the money partner should be getting 50-60% of the deal, with the other partners splitting the balance, if you want to do an equity deal. J laid it out perfectly, the money partner is the one with the considerable risk in the deal (especially if he is guaranteeing any additional debt!), despite whatever your opportunity costs (and other admin costs) may be worth.

If you feel this is unfair, another option is to simply take a loan from the money guy and pay him a nice rate and maybe some points upfront or upon exit.

Jon Klaus Thanks for the link to Don's post. He does a great job explaining the issue. I will respond to his post in that thread with a couple questions.

Brian Burke and Ann Bellamy, both of you work extensively with private investors. Do either of you work with non-accredited investors? Why or why not? Have you seen any of the legal issues discussed in this thread come up with them and if so, how easy were they to mitigate? Brian, if I remember correctly from the podcast, your first group of investors were your former co-workers (policemen and women). Surely, most of them were not accredited. so am I right to assume you felt comfortable with the risk?

Ned Carey thanks for your breakdown of the law. I have followed your responses in a few of the other theads and your frightening analysis of how just about anything is a security is what led me to consult an attorney prior to completing a deal. I would be interested to hear your response to J Scott's questions.

Joel Owens I am definitely leaning on my attorney's advice. As I said, she is the director of security law for a large firm. I know that rank does not necessitate intelligence, but I have to respect her highly paid opinion as I move forward.

Great advice Jeff S. How did you find a strong attorney who was actively lending on real estate?

Jeff S I am not trying to pool money or do anything too complicated. One investor, one note secured by one property. I think she is being a bit too cautious as well, but I have never set up a private lending transaction before and she is the director of the securities division for a large law firm, so you can see why I listened to her. How do I basically tell her shes wrong?

Karen Margrave thanks for the feedback, and I agree with Jeff as well. Hard money lenders have their place, but I can get better terms from private individuals, so if I can do that without jumping to #1 on the SEC's watch-list, I want to try that first!

I am speaking with my attorney who is helping me setup the proper documentation for use with private investors. She is suggesting that I do not deal with non-accredited investors because if something should happen to them and they need their money back, they could sue me and claim that they should not have invested in the deal but did anyway because they didn't know any better. She feels that the disclosure documents that would be required for me to use a non-accredited investor would be too onerous for the type of financing I am seeking.

My strategy is to use private money for a one year term to acquire/rehab a rental property priced under $100k, then refinance to a conventional lender after that term.

I am kind of stuck here, as most of my potential private lenders have money sitting idle they want to invest, but do not meet the accredited investor threshold.

Has anyone had this sort of risk come up and how have you dealt with it? Is everyone who is using private money only using accredited investors?

You should be bragging about this one. Awesome job Brian!

Chris Clothier I may take you up on that. It sounds like you have an awesome piece of software. I will send you a PM.

Chris Clothier

Does this integrate with whatever accounting system you use or is double entry required?

Bill, which structure do you use and why? Any other lenders care to share?

I have always wondered how the HML makes money in a private placement. I would assume the principal owns a portion of the fund and contributes some of his own capital, but wouldn't he have to distribute the profits in the form of dividends to the other members of the pool? Besides his return for his shares in the fund, how does he make any money?

Karen,

I am in charge of company's blog (non-REI related). The best advice on finding topics to talk about I can give you is to think about questions that your potential customers are having about your product, then answer them in a blog post. How to's, Versus, and articles that talk about price are huge hits in terms of customer visits.

I can speak with great authority that since we have started blogging, we have seen our business nearly double, and if we get all of the work we have bid on, triple again within the next two years. This is mainly because no one was doing it in my industry, but as you can see from the other posters, there is still plenty of room in real estate for great content.

Two great resources for information on business blogging and internet marketing that I have used to help me get started and find motivation to keep it going are:

blog.hubspot.com

www.thesaleslion.com