Attention, military personnel! While homebuyer tax credits expire for the rest of the population tomorrow, military personnel have until NEXT April 30, 2011 to take advantage of this homebuyer incentive!
Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.
For more details on the credit, visit the First-Time Homebuyer Credit page on IRS.gov.
Thursday, April 29, 2010
Wednesday, April 28, 2010
Pet-Friendly Vintage Brick Triplex Apt w/ Garage!
Designer unit on corner lot in beautifully-remodelled brick triplex. Lots of architectural details, hardwood floors, new appliances, leaded glass front door windows, old world charm with up-to-code conveniences, in a desireable location. This unit comes with its own off-street garage with automatic roll-up door for storage or parking; and plenty of free street parking available for visitors. Walking distance to Lake Washington, stores and restaurants in a quiet residential neighborhood just 2.5 miles from downtown Seattle.
Updated energy-efficiency reduces tenant's utility costs for electric heat. Landlord pays for garbage, water, sewer, exterior lighting, regular yard maintenance, and professional property management. Tenant just pays electricity (and additional desired services such as phone, cable and/or internet).
About the neighborhood:
Neighborhood is close to Capitol Hill, Central District and the Madrona restaurants area. It is walking distance to wooded trails to Lake Washington. Douglass Truth Library, Samarya Yoga Center, Red Apple grocery store, a couple of coffee shops, Amazon.com, Lowe's and Walgreen’s.
Transportation:
Easy access to I-90, highways, and bus lines. Several bus routes nearby go to various areas including Capitol Hill, downtown, Queen Anne, south Seattle, University District, etc. (#2, 3, 4, 8, 14, 27 and 48).
Tuesday, April 27, 2010
Furnished temporary stay in Seattle
Furnished room in elegantly restored house-share with old world charm and details. walking distance to Lake Washington, stores and restaurants in a quiet residential neighborhood just 2.5 miles from downtown Seattle. Elegant furnished bedrooms on the main floor shares a large kitchen with all modern appliances, gas stove, microwave and dishwasher. Hardwood flooring throughout, large living room with convenient gas fireplace, spacious sun porch with magnificent view of Lake Washington, Bellevue skyline and mountains. French doors to backyard deck for BBQ and yard. Washer and dryer in basement. Utilities include wireless internet, electric, gas, garbage, water, sewer, and lawn maintenance.
About the neighborhood:
Neighborhood is close to Capitol Hill, Central District and the Madrona restaurants area. It is walking distance to wooded trails to Lake Washington. Douglass Truth Library, Samarya Yoga Center, Red Apple grocery store, a couple of coffee shops, Amazon.com, Lowe's and Walgreen’s.
Transportation:
Easy access to I-90, highways, and bus lines. Several bus routes nearby go to various areas including Capitol Hill, downtown, Queen Anne, south Seattle, University District, etc. (#2, 3, 4, 8, 14, 27 and 48).
Community living: Typically, our housemates are responsible, working professionals who enjoy living in a nice place with other respectful individuals. Typically, our short-term furnished approach to housing attracts people in transitional times of life, and new arrivals, including many contract workers or international visitors--really anyone who wants a convenient, hassle-free lifestyle without having to purchase or bring a lot of stuff into a household and without having to commit to a long-term lease. Contact me for more information.
Monday, April 26, 2010
Buildable Lot with Waterfront Access
Here is my latest property offering: a buildable 28,293sf lot with waterfront access and west-facing views in unincorporated Kitsap County, just three miles from the Seattle ferry dock. This parcel contains a 754 sf three-car garage including a two-car door, and one-car door both with shop space; and an additional 225 sf tall RV carport with concrete pad for RV parking. Easement driveway provides access to 120' of Rocky Point saltwater frontage, boat launch and dock. Possible views of the water from building site. Mostly level site, has sloping meadow that contains neighbor's drainfield. 100% financing available through USDA if purchased for primary residence! Zoned UL ("Urban Low Density"), which allows for 5-9 units per acre; Indigo Septic Design says parcel will support a standard 3-bedroom septic system.
Saturday, April 24, 2010
Lessons from a Successful Entrepreneur
"Systems are key...."
"Don't work with partners."
"Learn the business first, then hire people to do it for you."
"Find some good mentors."
"The only problem is, I work too hard."
I had the pleasure of spending some time these past two days with Patrick Grace of Grace Realty in Kansas City, MO. My good friend and fellow investor David Tamburello had brought Pat up to meet with Seattle investors, after having spent the past 1 1/2 years investing in KC with him. I can see why David is so jazzed about partnering with Pat Grace, as much as he is excited about the emerging market of KC.
Pat Grace owns a "vertically-integrated" system of real estate companies focused on meeting the needs of real estate investors. Along the way, he rehabilitates beautiful old houses, provides affordable housing and jobs in his local Hispanic community, transforming neighborhoods and lives. And at the same time, he makes some good money. Pretty awesome work for a real estate investor!
Pat started out in real estate ten years ago, becoming a broker and opening his own real estate company in a room in his house. He then worked for a mortgage company for 1 1/2 years, learning all about the money side of things and figuring out how to gain access to the banks, funding and REO properties.
"Wendy, ya gotta stay close to the money...."
Then he opened his own mortgage company. As both a lender and an agent working with investors, he saw the profits that were being made in rehabbing old houses. He opened his own construction company, and learned on the job how to do construction. He uses licensed electricians and plumbers, but for the bulk of his work, employs many of his Hispanic tenants to do everything else involved in construction.
He kept buying and selling properties for himself and other investors. Suddenly, he had a lot of properties to manage-and who was going to do that?
So Pat opened a property management company. "That's the hardest business so far; the profit margins are small, there's a lot of requirements and paperwork, but it's part of our service to investors."
Pat operates on the philosophy that he is building long-term relationships with his clients. He intentionally keeps his fees low, and focuses on building repeat business over time. The guy is street-smart and business-savvy.
Oh, and it doesn't hurt that his wife is Hispanic, fluent in Spanish, and involved in the business too. Pat no longer has a real estate license, because his wife is the broker in the real estate company and oversees the property management company.
"I have two main jobs, Wendy: find the investors, and find the properties."
Pleasure meeting you, Pat! You are an inspiration, and I suspect there will be some more Seattle investment dollars flowing your way....
"Don't work with partners."
"Learn the business first, then hire people to do it for you."
"Find some good mentors."
"The only problem is, I work too hard."
I had the pleasure of spending some time these past two days with Patrick Grace of Grace Realty in Kansas City, MO. My good friend and fellow investor David Tamburello had brought Pat up to meet with Seattle investors, after having spent the past 1 1/2 years investing in KC with him. I can see why David is so jazzed about partnering with Pat Grace, as much as he is excited about the emerging market of KC.
Pat Grace owns a "vertically-integrated" system of real estate companies focused on meeting the needs of real estate investors. Along the way, he rehabilitates beautiful old houses, provides affordable housing and jobs in his local Hispanic community, transforming neighborhoods and lives. And at the same time, he makes some good money. Pretty awesome work for a real estate investor!
Pat started out in real estate ten years ago, becoming a broker and opening his own real estate company in a room in his house. He then worked for a mortgage company for 1 1/2 years, learning all about the money side of things and figuring out how to gain access to the banks, funding and REO properties.
"Wendy, ya gotta stay close to the money...."
Then he opened his own mortgage company. As both a lender and an agent working with investors, he saw the profits that were being made in rehabbing old houses. He opened his own construction company, and learned on the job how to do construction. He uses licensed electricians and plumbers, but for the bulk of his work, employs many of his Hispanic tenants to do everything else involved in construction.
He kept buying and selling properties for himself and other investors. Suddenly, he had a lot of properties to manage-and who was going to do that?
So Pat opened a property management company. "That's the hardest business so far; the profit margins are small, there's a lot of requirements and paperwork, but it's part of our service to investors."
Pat operates on the philosophy that he is building long-term relationships with his clients. He intentionally keeps his fees low, and focuses on building repeat business over time. The guy is street-smart and business-savvy.
Oh, and it doesn't hurt that his wife is Hispanic, fluent in Spanish, and involved in the business too. Pat no longer has a real estate license, because his wife is the broker in the real estate company and oversees the property management company.
"I have two main jobs, Wendy: find the investors, and find the properties."
Pleasure meeting you, Pat! You are an inspiration, and I suspect there will be some more Seattle investment dollars flowing your way....
Friday, April 23, 2010
Government Programs for Real Estate
I had dinner with and listened last night to national speaker Sean Carpenter at the Real Estate Association of Puget, talking about government funding programs for real estate development. Sean Carpenter has done over $500M in real estate transactions over the past 12 years using government programs to put tenants in his properties, cover down payments, fund entire rehabs, and paying out millions in tax credits. These are OUR tax dollars, and the federal government makes these funds available to fuel economic growth and redevelop blighted neighborhoods.
Government funding is available through such programs as Low-Income Housing Tax Credits, Neighborhood Stabilization funds, Community Development Block Grants (which just celebrated its 40th anniversary!), Home Program, Section 8 housing vouchers, Federal Home Loan Bank funding, and FHA programs such as FHA 221(d)(4) for new construction, and Sean's favorite FHA223(f).
Some of these government funding programs offer 0% interest, no payments, and loan forgiveness within 15 years.
As a former government employee, I know that these programs are out there, and that they exist to stimulate economic development, eliminate blight, encourage economic growth, and to achieve other public policy goals such as affordable housing. Tax incentives and tax credits can make an otherwise unprofitable venture more attractive to a developer/investor.
Last night's talk rekindled my interest in developing artist spaces, an opportunity to marry my 25 year career as a government arts administrator with my new career path as a real estate entrepreneur. If any of my readers are interested in pursuing this angle of development, let's talk!
Government funding is available through such programs as Low-Income Housing Tax Credits, Neighborhood Stabilization funds, Community Development Block Grants (which just celebrated its 40th anniversary!), Home Program, Section 8 housing vouchers, Federal Home Loan Bank funding, and FHA programs such as FHA 221(d)(4) for new construction, and Sean's favorite FHA223(f).
Some of these government funding programs offer 0% interest, no payments, and loan forgiveness within 15 years.
As a former government employee, I know that these programs are out there, and that they exist to stimulate economic development, eliminate blight, encourage economic growth, and to achieve other public policy goals such as affordable housing. Tax incentives and tax credits can make an otherwise unprofitable venture more attractive to a developer/investor.
Last night's talk rekindled my interest in developing artist spaces, an opportunity to marry my 25 year career as a government arts administrator with my new career path as a real estate entrepreneur. If any of my readers are interested in pursuing this angle of development, let's talk!
Thursday, April 22, 2010
King vs. Kitsap Waterfront
Here are ALL the 3BR waterfront homes that sold for under $300K in the past three months in King County:
27319 SE 306th St Black Diamond 3BR/2BA 1300sf .3ac $151,052
Driving time to downtown Seattle (according to Mapquest): 52 minutes*
17408 SE 196th Dr Renton 3BR/1BA 1470sf 5ac $292,972
Driving time to downtown Seattle (according to Mapquest): 32 mins*
Here are ALL the 3BR waterfront homes currently listed for under $300K in King County:
3808 I Place NE Auburn $175,000
Drive time: 31 mins*
5124 S 234th St Kent $194,950
Drive time: 26 mins*
29641 196th Ave SE Kent $245,000
Drive time: 45 mins*
14824 439th Place SE North Bend $250,000
Drive time: 38 mins*
3713 S 272nd St Kent $285,000
Drive time: 24 mins*
*Add 50% for rush hour and traffic accidents
And here is what you can get in Kitsap, just a 3 mile drive to a scenic one-hour ferry ride from downtown Seattle:
2525 Rocky Point Road NW 3+BR/2.5BA 2323sf .5ac 120' of saltwater frontage w/boat dock, boat launch, bulkhead + outdoor firepit $280,000
see www.RockyPointRoadNW.com for more details
Why fight the traffic? Kitsap County has more miles of shoreline than any other Washington county! Live on the water for an affordable price; and sleep, work or sightsee on your commute into downtown Seattle!
HURRY! Still time to take advantage of the Home Buyer Tax Credits before they expire April 30! Contact me for details.
Wednesday, April 21, 2010
Affordable Greenlake/Ravenna/U District Location!
Location-Location! Check out this charming 2 bedroom home in Ravenna with covered front porch, OWC and hardwood floors, unfinished basement and attic. Newer vinyl siding, gas furnace and roof. Kitchen has been remodeled. Very tastefully decorated. You will love the fenced garden retreat with koi pond and raised garden beds in the back yard. Extra off street parking fenced, behind the house. Walking distance to the University of Washington and to Greenlake. A great neighborhood! Location is north of 45th and south of 65th Streets, east of Interstate 5.
Tax Assessed (2009): $328,000
Zillow Zestimate: $347,000 ($308,000-375,000)
Comps:
1209 NE 56th St Sold 2/19/2010 $380,000 3BR/1BA 1100sf 0.30mi from subj property
810 NE Ravenna Blvd Sold 1/29/2010 $309,000 2BR/1BA 1000sf 0.37mi fr subj property
5016 Keystone Pl N Sold 1/06/2010 $494,900 2BR/1BA 1010sf 0.48mi fr subj property
Lots of recent updates completed. Needs about $10,000 worth of improvements--replacing bedroom carpets, replace tub surround, minor touch-up painting or repair, remove popcorn ceilings, level southwest corner of living room.
If interested, please email me at:
HomeLandInvestment@gmail.com
Tuesday, April 20, 2010
Seattle Rent to Own
MOVE-IN SPECIAL: the rest of April FREE!!!
RENT this charming 1940s bungalow on a quiet dead-end side street ten minutes from downtown Seattle for just $1200 per month as a straight rental. Or pay just a bit more and credit $250 towards the purchase of your new home! That's right! You may RENT or RENT-to-OWN while you earn equity towards the purchase of your new home! Great starter home at an affordable price, rent-to-own terms available! Features include hardwood floors, cozy wood fireplace, new one-car detached garage, large fenced yard, outdoor patio, newer oil furnace (above-ground storage tank), and City views!
The main floor has a large living room with hardwood flooring and a woodburning fireplace, bedroom, a full bath, and kitchen. An addition off the kitchen with its own sliding glass door entry could be converted to another bedroom, office, media center or workout room.
Upstairs is a full-size attic bedroom with an awesome Seattle skyline view. This room could easily be divided into two bedrooms, a spacious master suite, or add a bathroom. Current pull-down stairs might be replaced with a spiral staircase.
The laundry is located downstairs in the unfinished basement.
A nice pet-friendly rental--or use your sweat equity and imagination to make this cosmetic fixer your dream home! Instant equity! Purchase price is below today's tax-assessed value! Call today for rent-to-own terms, or simply start out renting!
Take a drive by, but do not disturb the current month-to-month tenants. If you like what you see, call 206-355-1706 to schedule a showing.
Driving Directions: Going North on I-5, take the 599 exit in Tukwila; go North to Des Moines Memorial Drive exit and head South; Turn right on S 99th; Left on S 100th St; then left on 14th Court South. This home is located within minutes of the Museum of Flight, the Hat and Boots sculpture in Oxbow Park, Southcenter, and the trendy shops and restaurants of Georgetown.
Monday, April 19, 2010
Hurry on Waterfront before Tax Credits Expire Next Week!
Must sell! 3+ BR home on TWO tax lots w/sunset views, dock, 120' no-bank WFT. $100K below tax value! EZ commute to dwtwn Seattle. Just $280,000 OBO. Open House this Sunday 2-4pm. www.2525RockyPointRoadNW.com
FREE list of waterfront properties like the one above, priced under $300,000 in King, Pierce, Snohomish and Kitsap Counties on fresh and saltwater frontage. NOW is the time to buy waterfront! Hurry and make an offer before the Homebuyer Tax Credits expire on April 30th! For your free list of waterfront bargains, including fixers, short sales and REOs (or for more details on the home above), contact HomeLandInvestment@gmail.com
Saturday, April 17, 2010
New Lead Paint Requirements
RRP RULE AND NEW LEAD-SAFE PRACTICES REQUIREMENT AFFECTING LANDLORDS BEGINNING NEXT WEEK ON APRIL 22, 2010
The EPA has issued a Renovation, Repair and Paint rule (RRP) requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning April 22, 2010, landlords and contractors performing renovation, repair and painting projects that disturb lead-based paint in rental property built before 1978 must be certified and must follow specific work practices to prevent lead contamination. Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.
What types of properties and facilities does the lead paint rule apply to?
The RRP Rule applies to "residential houses, apartments, and child-occupied facilities such as schools and day-care facilities built before 1978." In addition, the rule must be followed when "repair or maintenance activities disturb more than 6 square feet of paint per room inside, or more than 20 square feet on the exterior of a home or building." Renovation is broadly defined as any activity that disturbs painted surfaces and includes most repair, remodeling, and maintenance activities, including window replacement.
Exceptions?
The EPA outlines activities which are excluded from the rule, such as emergency repairs and "minor' repair or maintenance, including work with less than six square feet of disturbed interior space. However, the EPA specifically states that "window replacement" is not minor repair or maintenance.
Who must follow the rule?
According to the EPA, the rule applies as follows: "In general, anyone who is paid to perform work that disturbs paint in housing and child-occupied facilities built before 1978, including but not limited to: residential rental property owners/managers; general contractors; special trade contractors including painters, plumbers, carpenters and electricians." As to landlords and property managers, the EPA booklet says, "The receipt of rent payments or salaries derived from rent payments is considered compensation under the EPA's lead paint rule. Therefore, renovation activities performed by landlords or employees of landlords are covered [by the rule]."
What are some of the rule requirements?
Rental property owners or contractors working on your rentals, who renovate, repair, or prepare surfaces for painting in pre-1978 rental housing must, before beginning work, provide tenants with a copy of EPA's lead hazard information pamphlet Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools. Owners of these rental properties must document compliance with this requirement. The EPA werbsite provides a sample pre-renovation disclosure form, which may be used for this purpose.
Understand that after April 22, 2010, landlords who work on their own properties or contractors doing the work, and perform above mentioned projects in pre-1978 rental housing, must be certified and follow the lead-safe work practices required by EPA's Renovation, Repair and Remodeling rule. If you are the landlord/owner and do the work yourself, you must be a trained renovator. You are allowed to teach any workers helping you and they perform the work under your training. And, if you aren't a contractor, and are an owner/landlord, then besides being "a trained renovator", you have to file with the EPA that you or your company is certified and responsible for your trained workers.To become certified, property owners and contractors must submit an application for certification and fee payment to EPA.
A "certified renovator" must be assigned to each renovation project, and "must be available, either on-site or by telephone, at all times renovations are being conducted." This person must have completed an 8-hour training course approved by the EPA. A full list of providers is listed at: http://www.epa.gov/lead/pubs/renovation.htm
Property owners who perform renovation, repairs, and painting jobs in rental property should also:
* Learn the lead laws that apply to you regarding certification and lead-safe work practices beginning in April 2010.
* Keep records to demonstrate that you and any one working under your supervision have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklist on the EPA website that was developed to help renovators comply with the renovation recordkeeping requirements that will take effect in April 2010.
Any requirements for homeowners working at their own Home?
If you are a homeowner performing renovation, repair, or painting work in your own home, EPA's RRP rule does not cover your project. However, you have the ultimate responsibility for the safety of your family or children in your care.
Any additional requirements for Contractors working on your rentals?
Any contractors who perform renovation, repairs, and painting jobs on your rental property should also:
* Take training to learn how to perform lead-safe work practices.
* Find a training provider that has been accredited by EPA to provide training for renovators under EPA's Renovation, Repair, and Painting (RRP) Program.
* Please note that if contractors previously completed an eligible renovation training course they may take the 4-hour refresher course instead of the 8-hour initial course from an accredited training provider to become a certified renovator.
* Provide a copy of your EPA or state lead training certificate to landlord clients.
* Tell landlord clients what lead-safe methods you will use to perform the job.
* Learn the lead laws that apply to them regarding certification and lead-safe work practices beginning in April 2010.
* Ask landlord client to share the results of any previously conducted lead tests.
Provide landlord clients with references from at least three recent jobs involving homes built before 1978.
* Firms are required to be certified, their employees must be trained in use of lead-safe work practices, and lead-safe work practices that minimize occupants' exposure to lead hazards must be followed.
* Keep records to demonstrate that you and your workers have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklistfrom their website that EPA has developed to help contractors comply with the renovation recordkeeping requirements that will take effect in April 2010.
* Read about how to comply with EPA's rule in the EPA Small Entity Compliance Guide to Renovate Right.
* Read about how to use lead-safe work practices in EPA's Steps to Lead Safe Renovation, Repair and Painting. NOTE: Contractors and training providers working in Wisconsin, Iowa, or North Carolina must contact the state to find out more about its training and certification requirements. These states are authorized to administer their own RRP programs in lieu of the federal program.
What is the penalty for landlords or contractors who do not comply with the EPA rule?
Fines for violating RRP Rule requirements can be up to $37,500 per incident, per day.
Above excerpts are taken in part from the EPA website. For additional information, clarification or answers to frequently asked questions, refer to the EPA website.
The EPA has issued a Renovation, Repair and Paint rule (RRP) requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning April 22, 2010, landlords and contractors performing renovation, repair and painting projects that disturb lead-based paint in rental property built before 1978 must be certified and must follow specific work practices to prevent lead contamination. Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.
What types of properties and facilities does the lead paint rule apply to?
The RRP Rule applies to "residential houses, apartments, and child-occupied facilities such as schools and day-care facilities built before 1978." In addition, the rule must be followed when "repair or maintenance activities disturb more than 6 square feet of paint per room inside, or more than 20 square feet on the exterior of a home or building." Renovation is broadly defined as any activity that disturbs painted surfaces and includes most repair, remodeling, and maintenance activities, including window replacement.
Exceptions?
The EPA outlines activities which are excluded from the rule, such as emergency repairs and "minor' repair or maintenance, including work with less than six square feet of disturbed interior space. However, the EPA specifically states that "window replacement" is not minor repair or maintenance.
Who must follow the rule?
According to the EPA, the rule applies as follows: "In general, anyone who is paid to perform work that disturbs paint in housing and child-occupied facilities built before 1978, including but not limited to: residential rental property owners/managers; general contractors; special trade contractors including painters, plumbers, carpenters and electricians." As to landlords and property managers, the EPA booklet says, "The receipt of rent payments or salaries derived from rent payments is considered compensation under the EPA's lead paint rule. Therefore, renovation activities performed by landlords or employees of landlords are covered [by the rule]."
What are some of the rule requirements?
Rental property owners or contractors working on your rentals, who renovate, repair, or prepare surfaces for painting in pre-1978 rental housing must, before beginning work, provide tenants with a copy of EPA's lead hazard information pamphlet Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools. Owners of these rental properties must document compliance with this requirement. The EPA werbsite provides a sample pre-renovation disclosure form, which may be used for this purpose.
Understand that after April 22, 2010, landlords who work on their own properties or contractors doing the work, and perform above mentioned projects in pre-1978 rental housing, must be certified and follow the lead-safe work practices required by EPA's Renovation, Repair and Remodeling rule. If you are the landlord/owner and do the work yourself, you must be a trained renovator. You are allowed to teach any workers helping you and they perform the work under your training. And, if you aren't a contractor, and are an owner/landlord, then besides being "a trained renovator", you have to file with the EPA that you or your company is certified and responsible for your trained workers.To become certified, property owners and contractors must submit an application for certification and fee payment to EPA.
A "certified renovator" must be assigned to each renovation project, and "must be available, either on-site or by telephone, at all times renovations are being conducted." This person must have completed an 8-hour training course approved by the EPA. A full list of providers is listed at: http://www.epa.gov/lead/pubs/renovation.htm
Property owners who perform renovation, repairs, and painting jobs in rental property should also:
* Learn the lead laws that apply to you regarding certification and lead-safe work practices beginning in April 2010.
* Keep records to demonstrate that you and any one working under your supervision have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklist on the EPA website that was developed to help renovators comply with the renovation recordkeeping requirements that will take effect in April 2010.
Any requirements for homeowners working at their own Home?
If you are a homeowner performing renovation, repair, or painting work in your own home, EPA's RRP rule does not cover your project. However, you have the ultimate responsibility for the safety of your family or children in your care.
Any additional requirements for Contractors working on your rentals?
Any contractors who perform renovation, repairs, and painting jobs on your rental property should also:
* Take training to learn how to perform lead-safe work practices.
* Find a training provider that has been accredited by EPA to provide training for renovators under EPA's Renovation, Repair, and Painting (RRP) Program.
* Please note that if contractors previously completed an eligible renovation training course they may take the 4-hour refresher course instead of the 8-hour initial course from an accredited training provider to become a certified renovator.
* Provide a copy of your EPA or state lead training certificate to landlord clients.
* Tell landlord clients what lead-safe methods you will use to perform the job.
* Learn the lead laws that apply to them regarding certification and lead-safe work practices beginning in April 2010.
* Ask landlord client to share the results of any previously conducted lead tests.
Provide landlord clients with references from at least three recent jobs involving homes built before 1978.
* Firms are required to be certified, their employees must be trained in use of lead-safe work practices, and lead-safe work practices that minimize occupants' exposure to lead hazards must be followed.
* Keep records to demonstrate that you and your workers have been trained in lead-safe work practices and that you followed lead-safe work practices on the job. To make recordkeeping easier, you may use the sample recordkeeping checklistfrom their website that EPA has developed to help contractors comply with the renovation recordkeeping requirements that will take effect in April 2010.
* Read about how to comply with EPA's rule in the EPA Small Entity Compliance Guide to Renovate Right.
* Read about how to use lead-safe work practices in EPA's Steps to Lead Safe Renovation, Repair and Painting. NOTE: Contractors and training providers working in Wisconsin, Iowa, or North Carolina must contact the state to find out more about its training and certification requirements. These states are authorized to administer their own RRP programs in lieu of the federal program.
What is the penalty for landlords or contractors who do not comply with the EPA rule?
Fines for violating RRP Rule requirements can be up to $37,500 per incident, per day.
Above excerpts are taken in part from the EPA website. For additional information, clarification or answers to frequently asked questions, refer to the EPA website.
Friday, April 16, 2010
Hot Real Estate Markets
“Whatever mix you deem prudent, I believe it's time to reevaluate your exposure to the real-estate sector. In my view, real estate belongs in every diversified investment portfolio. It's not highly correlated to equities or fixed income, and it offers income opportunities as well as a potential hedge against inflation. I've been keeping some cash on hand designated for real estate, and I've concluded it's time to put some of it to work.”
—James B. Stewart, as reported in the Wall Street Journal 4/9/2010. Stewart is a columnist for SmartMoney magazine and SmartMoney.com, writes weekly about his personal investing strategy.
According to the Center on Housing Policy, the five most expensive homeownership markets in the country posted gains in 2009 median home prices as compared to the previous year. And virtually all California cities on the top 20 list of expensive housing markets posted gains in 2009 median home prices as compared to the previous year.
Seattle dropped in the list from #14 in 2008 to #20 in 2009, with a median home price of $303,000 in 2009 as compared to $335,000 in 2008.
The NY research firm Reis tracks vacancies and rents in the top 79 U.S. markets, and rents rose in 60 of them, led by Miami, Seattle and New York—all cities that had notched big rental declines in the past year. Median rents for a two bedroom apartment, edged up in Seattle from $976 in 2008 to $1056 in 2009, making it the 47th most expensive rental market in the survey by the Center on Housing Policy.
Interestingly, 2009 rents in Bremerton, WA were comparable to rents in Dallax, TX at $894 for that same two bedroom (#82 on the list). Tacoma rents ranked #60 at $968, just above Santa Fe, NM. And Olympia was #86 on the list with rents of $876.
Meanwhile, difficulty in financing new apartment construction has limited the supply of new multifamily units that will be added in the coming years. This news has landlords and investors excited about the potential for rents to increase once the economy recovers.
Thursday, April 15, 2010
New Lead Paint Requirements
Effective on April 22nd, the new EPA Residential Property Renovation rules for pre-1978 housing renovations apply when doing any repair or maintenance activities that disturb 6 sq. ft. or more of paint per room inside, or 20 sq. ft. or more on the exterior of a home or building.
Any work exceeding these minimal areas must be done by a certified lead paint contractor. This includes plumbing, heating and air conditioning, painting, wall covering, electrical, finish carpentry, drywall, insulation, siding, tile, glass and glazing work. And know that the EPA considers rental income as compensation for
purposes of this rule and therefore you will need to be certified if you are having work done on your own property!
Please let me know if you hear of classes for this lead paint certification in the Seattle area!
Any work exceeding these minimal areas must be done by a certified lead paint contractor. This includes plumbing, heating and air conditioning, painting, wall covering, electrical, finish carpentry, drywall, insulation, siding, tile, glass and glazing work. And know that the EPA considers rental income as compensation for
purposes of this rule and therefore you will need to be certified if you are having work done on your own property!
Please let me know if you hear of classes for this lead paint certification in the Seattle area!
Tuesday, April 13, 2010
SEC Exemption for Private Borrrowing
This 1962 release by the SEC is still the latest word on exemptions for investors looking for equity partners and/or private funds (be sure to note the comments for private investment clubs, which follows at the very end of this blog):
Nonpublic Offering Exemption
The Commission ...announced the issuance of a statement regarding the availability of the exemption from the registration requirements of section 5 of the Securities Act of 1933 afforded by the second clause of section 4(1)1 of the Act for "transactions by an issuer not involving any public offering," the so-called " private offering exemption." Traditionally, the second clause of section 4(1)1 has been regarded as providing an exemption from registration for bank loans, private placements of securities with institutions, and the promotion of a business venture by a few closely related persons. However, an increasing tendency to rely upon the exemption for offerings of speculative issues to unrelated and uninformed persons prompts this statement to point out the limitations on its availability.
Whether a transaction is one not involving any public offering is essentially a question of fact and necessitates a consideration of all surrounding circumstances, including such factors as the relationship between the offerees and the issuer, the nature, scope, size, type and manner of the offering.
The Supreme Court in S.E.C. v. Ralston Purina Co., 346 U.S. 119, 124, 125 (1953), noted that the exemption must be interpreted in the light of the statutory purpose to "protect investors by promoting full disclosure of information thought necessary to informed investment decisions" and held that "the applicability of section 4(1) should turn on whether the particular class of persons affected need the protection of the Act." The court stated that the number of offers is not conclusive as to the availability of the exemption, since the statute seems to apply to an offering "whether to few or many."2 However, the court indicated that "noting prevents the Commission, in enforcing the statute, from using some kind of numerical test in deciding when to investigate particular exemption claims." It should be emphasized, therefore, the at the number of persons to whom the offering is extended is relevant only to the question whether they have the requisite association with and knowledge of the issuer which make the exemption available.
Consideration must be given not only to the identity of the actual purchasers but also to the offerees. Negotiations or conversations with or general solicitations of an unrestricted and unrelated group of prospective purchasers for the purpose of ascertaining who would be willing to accept an offer of securities is inconsistent with a claim that the transaction does not involve a public offering even though ultimately there may only be a few knowledgeable purchasers.3
A question frequently arises in the context of an offering to an issuer's employees. Limitation of an offering to certain employees designated as key employees may not be a sufficient showing to qualify for the exemptions. As the Supreme Court stated in Ralston Purina case: "The exemption as we construe it, does not deprive corporate employees, as a class, of the safeguards of the Act. We agree that some employee offerings may come within section 4(a), e.g., one made to executive personnel who because of their position have access to the same kind of information that the Act would make available in the form of a registration statement. Absent such a showing of special circumstances, employees are just as much members of the investing "public" as any of their neighbors in the community." The Court's concept is that the exemption is necessarily narrow. The exemption does not become available simply because offerees are voluntarily furnished information about the issuer. Such a construction would give each issuer the choice of registering or making its own voluntary disclosures without regard to the standards and sanctions of the Act.
The sale of stock to promoters who take the initiative in founding or organizing the business would come within the exemption. On the other hand, the transaction tends to become public when the promoters begin to bring in a diverse group of uninformed friends, neighbors and associates.
The size of the offering may also raise questions as to the probability that the offering will be completed within the strict confines of the exemption. An offering of millions of dollars to non-institutional and non-affiliated investors or one divided, or convertible, into many units would suggest that a public offering may be involved.
When the services of an investment banker, or other facility through which public distributions are normally effected, are used to place the securities, special care must be taken to avoid a public offering. If the investment banker places the securities with discretionary accounts and other customers without regard to the ability of such customers to meet the tests implicit in the Ralston Purina case, the exemption may be lost. Public advertising of the offerings would, of course, be incompatible with a claim of a private offering. Similarly, the use of the facilities of a securities exchange to place the securities necessarily involves an offering to the public.
An important factor to be considered is whether the securities offered have come to rest in the hands of the initial informed group or whether the purchasers are merely conduits for a wider distribution. Persons who act in this capacity, whether or not engaged in the securities business, are deemed to be "underwriters" within the meaning of section 2(11) of the Act. If the purchasers do in fact acquire the securities with a view to public distribution, the sell assumes the risk of possible violation of the registration requirements of the Act and consequent civil liabilities.4 This has led to the practice whereby the issuer secures from the initial purchasers representations that they have acquired the securities for investment. Sometimes a legend to this effect is placed on the stock certificates and stop-transfer instructions issued to the transfer agent. However, a statement by the initial purchaser, at the time of his acquisition that the securities are taken for investment and not for distribution is necessarily self-serving and not conclusive as to his actual intent. Mere acceptance at face value of such assurances will not provide a basis for reliance on the exemption when inquiry would suggest to a reasonable person that these assurances are formal rather than real. The additional precautions of placing a legend on the securities and issuing stop-transfer orders have proved in many cases to be an effective means of preventing illegal distributions. Nevertheless, these are only precautions and are not to be regarded as a basis for exemption from registration. The nature of the purchaser's past investment and trading practices or the character and scope of his business may be inconsistent with the purchase of large blocks of securities for investment. In particular, purchases by persons engaged in the business of buying and selling securities require careful scrutiny for the purpose of determining whether such person may be acting as an underwriter for the issuer.
The view is occasionally expressed that, solely by reason of continued holding of a security for the six month capital-gain period specified in the income-tax laws, or for a year from the date of purchase, the security may be sold without registration. There is no statutory basis for such assumption. Of course, the longer the period of retention, the more persuasive would be the argument that the resale is not at variance with an original investment intent, but the length of time between acquisition and resale is merely one evidentiary fact to be considered. The weight to be accorded this evidentiary fact must, of necessity, vary with the circumstances of each case. Further, a limitation upon resale for a stated period of time or under certain circumstances would tend to raise a question as to original intent even though such limitation might otherwise recommend itself as a policing devise. There is no legal justification for the assumption that holding a security in an "investment account" rather than a "trading account," holding for a deferred sale, for a market rise, for sale if the market does not rise, or for a statutory escrow period, without more, establishes a valid basis for an exemption from registration under the Securities Act.5
An unforeseen change of circumstances since the date of purchase may be a basis for an opinion that the proposed resale is not inconsistent with an investment representation. However, such claim must be considered in the light of all of the relevant facts. Thus, an advance or decline in market price or a change in the issuer's operating results are normal investment risks and do not usually provide an acceptable basis for such claim of changed circumstances. Possible inability of the purchaser to pay off loans incurred in connection with the purchase of the stock would ordinarily not be deemed an unforeseeable change of circumstances. Further, in the case of securities pledged for a loan, the pledgee should not assume that he is free to distribute without registration. The Congressional mandate of disclosure to investors is not to be avoided to permit a public distribution of unregistered securities because the pledgee took the securities from a purchaser, subsequently delinquent.6
The view is sometimes expressed that investment companies and other institutional investors are not subject to any restrictions regarding disposition of securities stated to be taken for investment and that any securities so acquired may be sold by them whenever the investment decision to sell is made, no matter how brief the holding period. Institutional investors are, however, subject to the same restrictions on sale of securities acquired from an issuer or a person in a control relationship with an issuer insofar as compliance with the registration requirements of the Securities Act is concerned.
Integration of Offerings
A determination whether an offering is public or private would also include a consideration of the question whether it should be regarded as a part of a larger offering made or to be made. The following factors are relevant to such question of integration: whether (1) the different offerings are part of a single plan of financing, (2) the offerings involve issuance of the same class of security, (3) the offerings are made at or about the same time, (4) the same type of consideration is to be received, (5) the offerings are made for the general purpose.
What may appear to be a separate offering to a properly limited group will not be so considered if it is one of a related series of offerings. A person may not separate parts of a series of related transactions, the sum total of which is really one offering, and claim that a particular part is a nonpublic transaction. Thus, in the case of offerings of fractional undivided interests in separate oil or gas properties where the promoters must constantly find new participants for each new venture, it would appear to be appropriate to consider the entire series of offerings to determine the scope of this solicitation.
As has been emphasized in other releases discussing exemptions from the registration and prospectus requirements of the Securities Act, the terms of an exemption are to be strictly construed against the claimant who also has the burden of proving its availability.7 Moreover, persons receiving advise from the staff of the Commission that no action will be recommended if they proceed without registration in reliance upon the exemption should do so only with full realization that the tests so applied may not be proof against claims by purchasers of the security that registration should have been effected. Finally, sections 12(2) and 17 of the Act, which provide civil liabilities and criminal sanctions for fraud in the sale of a security, are applicable to the transactions notwithstanding the availability of an exemption from registration.
*Footnotes renumbered in 1986 reprint.
1
Second clause of section 4(1) is now section 4(2), as amended August 20, 1964.
2
See, also, Gilligan, Will & Co. v. S.E.C., 267 F. 2d 461, 467 (C.A. 2, 1959), cert. denied, 361 U.S. 896 (1960).
3
Reference is made to the so-called "investment clubs" which have been organized under claim of an exemption from the registration provisions of the Securities Act of 1933 as well as the Investment Company Act of 1940. It should not be assumed that so long as the investment club, which is an investment company within the meaning of the later Act, does not obtain more than 100 members, a public offering of its securities, namely the memberships, will not be involved. An investment company may be exempt from the provisions of the Investment Company Act if its securities are owned by no more than 100 persons and it is not making and does not presently propose to make a public offering of its securities (section 3(c)(1)). Both elements must be considered in determining whether the exemption is available.
4
See Release No. 33-4445.
5
See Release No. 33-3825 re The Crowell-Collier Publishing Company.
6
S.E.C. v. Guild Films Company, Inc. et al., 279 F. 2d 485 (C.A. 2, 1960), cert. denied sub nom. Santa Monica Bank v. S.E.C., 364 U.S. 819 (1960).
7
S.E.C. v. Sunbeam Gold Mining Co., 95 F. 2d 699, 701 (C.A. 9, 1938); Gilligan, Will & Co. v. S.E.C., 267 F. 2d 461, 466 (C.A. 2, 1959); S.E.C. v. Ralton Purina Co., 346 U.S. 119, 126 (1953); S.E.C. v. Culpepper et al., 270 F. 2d 241, 246 (C.A. 2, 1959).
http://www.sec.gov/rules/final/33-4552.htm
Nonpublic Offering Exemption
The Commission ...announced the issuance of a statement regarding the availability of the exemption from the registration requirements of section 5 of the Securities Act of 1933 afforded by the second clause of section 4(1)1 of the Act for "transactions by an issuer not involving any public offering," the so-called " private offering exemption." Traditionally, the second clause of section 4(1)1 has been regarded as providing an exemption from registration for bank loans, private placements of securities with institutions, and the promotion of a business venture by a few closely related persons. However, an increasing tendency to rely upon the exemption for offerings of speculative issues to unrelated and uninformed persons prompts this statement to point out the limitations on its availability.
Whether a transaction is one not involving any public offering is essentially a question of fact and necessitates a consideration of all surrounding circumstances, including such factors as the relationship between the offerees and the issuer, the nature, scope, size, type and manner of the offering.
The Supreme Court in S.E.C. v. Ralston Purina Co., 346 U.S. 119, 124, 125 (1953), noted that the exemption must be interpreted in the light of the statutory purpose to "protect investors by promoting full disclosure of information thought necessary to informed investment decisions" and held that "the applicability of section 4(1) should turn on whether the particular class of persons affected need the protection of the Act." The court stated that the number of offers is not conclusive as to the availability of the exemption, since the statute seems to apply to an offering "whether to few or many."2 However, the court indicated that "noting prevents the Commission, in enforcing the statute, from using some kind of numerical test in deciding when to investigate particular exemption claims." It should be emphasized, therefore, the at the number of persons to whom the offering is extended is relevant only to the question whether they have the requisite association with and knowledge of the issuer which make the exemption available.
Consideration must be given not only to the identity of the actual purchasers but also to the offerees. Negotiations or conversations with or general solicitations of an unrestricted and unrelated group of prospective purchasers for the purpose of ascertaining who would be willing to accept an offer of securities is inconsistent with a claim that the transaction does not involve a public offering even though ultimately there may only be a few knowledgeable purchasers.3
A question frequently arises in the context of an offering to an issuer's employees. Limitation of an offering to certain employees designated as key employees may not be a sufficient showing to qualify for the exemptions. As the Supreme Court stated in Ralston Purina case: "The exemption as we construe it, does not deprive corporate employees, as a class, of the safeguards of the Act. We agree that some employee offerings may come within section 4(a), e.g., one made to executive personnel who because of their position have access to the same kind of information that the Act would make available in the form of a registration statement. Absent such a showing of special circumstances, employees are just as much members of the investing "public" as any of their neighbors in the community." The Court's concept is that the exemption is necessarily narrow. The exemption does not become available simply because offerees are voluntarily furnished information about the issuer. Such a construction would give each issuer the choice of registering or making its own voluntary disclosures without regard to the standards and sanctions of the Act.
The sale of stock to promoters who take the initiative in founding or organizing the business would come within the exemption. On the other hand, the transaction tends to become public when the promoters begin to bring in a diverse group of uninformed friends, neighbors and associates.
The size of the offering may also raise questions as to the probability that the offering will be completed within the strict confines of the exemption. An offering of millions of dollars to non-institutional and non-affiliated investors or one divided, or convertible, into many units would suggest that a public offering may be involved.
When the services of an investment banker, or other facility through which public distributions are normally effected, are used to place the securities, special care must be taken to avoid a public offering. If the investment banker places the securities with discretionary accounts and other customers without regard to the ability of such customers to meet the tests implicit in the Ralston Purina case, the exemption may be lost. Public advertising of the offerings would, of course, be incompatible with a claim of a private offering. Similarly, the use of the facilities of a securities exchange to place the securities necessarily involves an offering to the public.
An important factor to be considered is whether the securities offered have come to rest in the hands of the initial informed group or whether the purchasers are merely conduits for a wider distribution. Persons who act in this capacity, whether or not engaged in the securities business, are deemed to be "underwriters" within the meaning of section 2(11) of the Act. If the purchasers do in fact acquire the securities with a view to public distribution, the sell assumes the risk of possible violation of the registration requirements of the Act and consequent civil liabilities.4 This has led to the practice whereby the issuer secures from the initial purchasers representations that they have acquired the securities for investment. Sometimes a legend to this effect is placed on the stock certificates and stop-transfer instructions issued to the transfer agent. However, a statement by the initial purchaser, at the time of his acquisition that the securities are taken for investment and not for distribution is necessarily self-serving and not conclusive as to his actual intent. Mere acceptance at face value of such assurances will not provide a basis for reliance on the exemption when inquiry would suggest to a reasonable person that these assurances are formal rather than real. The additional precautions of placing a legend on the securities and issuing stop-transfer orders have proved in many cases to be an effective means of preventing illegal distributions. Nevertheless, these are only precautions and are not to be regarded as a basis for exemption from registration. The nature of the purchaser's past investment and trading practices or the character and scope of his business may be inconsistent with the purchase of large blocks of securities for investment. In particular, purchases by persons engaged in the business of buying and selling securities require careful scrutiny for the purpose of determining whether such person may be acting as an underwriter for the issuer.
The view is occasionally expressed that, solely by reason of continued holding of a security for the six month capital-gain period specified in the income-tax laws, or for a year from the date of purchase, the security may be sold without registration. There is no statutory basis for such assumption. Of course, the longer the period of retention, the more persuasive would be the argument that the resale is not at variance with an original investment intent, but the length of time between acquisition and resale is merely one evidentiary fact to be considered. The weight to be accorded this evidentiary fact must, of necessity, vary with the circumstances of each case. Further, a limitation upon resale for a stated period of time or under certain circumstances would tend to raise a question as to original intent even though such limitation might otherwise recommend itself as a policing devise. There is no legal justification for the assumption that holding a security in an "investment account" rather than a "trading account," holding for a deferred sale, for a market rise, for sale if the market does not rise, or for a statutory escrow period, without more, establishes a valid basis for an exemption from registration under the Securities Act.5
An unforeseen change of circumstances since the date of purchase may be a basis for an opinion that the proposed resale is not inconsistent with an investment representation. However, such claim must be considered in the light of all of the relevant facts. Thus, an advance or decline in market price or a change in the issuer's operating results are normal investment risks and do not usually provide an acceptable basis for such claim of changed circumstances. Possible inability of the purchaser to pay off loans incurred in connection with the purchase of the stock would ordinarily not be deemed an unforeseeable change of circumstances. Further, in the case of securities pledged for a loan, the pledgee should not assume that he is free to distribute without registration. The Congressional mandate of disclosure to investors is not to be avoided to permit a public distribution of unregistered securities because the pledgee took the securities from a purchaser, subsequently delinquent.6
The view is sometimes expressed that investment companies and other institutional investors are not subject to any restrictions regarding disposition of securities stated to be taken for investment and that any securities so acquired may be sold by them whenever the investment decision to sell is made, no matter how brief the holding period. Institutional investors are, however, subject to the same restrictions on sale of securities acquired from an issuer or a person in a control relationship with an issuer insofar as compliance with the registration requirements of the Securities Act is concerned.
Integration of Offerings
A determination whether an offering is public or private would also include a consideration of the question whether it should be regarded as a part of a larger offering made or to be made. The following factors are relevant to such question of integration: whether (1) the different offerings are part of a single plan of financing, (2) the offerings involve issuance of the same class of security, (3) the offerings are made at or about the same time, (4) the same type of consideration is to be received, (5) the offerings are made for the general purpose.
What may appear to be a separate offering to a properly limited group will not be so considered if it is one of a related series of offerings. A person may not separate parts of a series of related transactions, the sum total of which is really one offering, and claim that a particular part is a nonpublic transaction. Thus, in the case of offerings of fractional undivided interests in separate oil or gas properties where the promoters must constantly find new participants for each new venture, it would appear to be appropriate to consider the entire series of offerings to determine the scope of this solicitation.
As has been emphasized in other releases discussing exemptions from the registration and prospectus requirements of the Securities Act, the terms of an exemption are to be strictly construed against the claimant who also has the burden of proving its availability.7 Moreover, persons receiving advise from the staff of the Commission that no action will be recommended if they proceed without registration in reliance upon the exemption should do so only with full realization that the tests so applied may not be proof against claims by purchasers of the security that registration should have been effected. Finally, sections 12(2) and 17 of the Act, which provide civil liabilities and criminal sanctions for fraud in the sale of a security, are applicable to the transactions notwithstanding the availability of an exemption from registration.
*Footnotes renumbered in 1986 reprint.
1
Second clause of section 4(1) is now section 4(2), as amended August 20, 1964.
2
See, also, Gilligan, Will & Co. v. S.E.C., 267 F. 2d 461, 467 (C.A. 2, 1959), cert. denied, 361 U.S. 896 (1960).
3
Reference is made to the so-called "investment clubs" which have been organized under claim of an exemption from the registration provisions of the Securities Act of 1933 as well as the Investment Company Act of 1940. It should not be assumed that so long as the investment club, which is an investment company within the meaning of the later Act, does not obtain more than 100 members, a public offering of its securities, namely the memberships, will not be involved. An investment company may be exempt from the provisions of the Investment Company Act if its securities are owned by no more than 100 persons and it is not making and does not presently propose to make a public offering of its securities (section 3(c)(1)). Both elements must be considered in determining whether the exemption is available.
4
See Release No. 33-4445.
5
See Release No. 33-3825 re The Crowell-Collier Publishing Company.
6
S.E.C. v. Guild Films Company, Inc. et al., 279 F. 2d 485 (C.A. 2, 1960), cert. denied sub nom. Santa Monica Bank v. S.E.C., 364 U.S. 819 (1960).
7
S.E.C. v. Sunbeam Gold Mining Co., 95 F. 2d 699, 701 (C.A. 9, 1938); Gilligan, Will & Co. v. S.E.C., 267 F. 2d 461, 466 (C.A. 2, 1959); S.E.C. v. Ralton Purina Co., 346 U.S. 119, 126 (1953); S.E.C. v. Culpepper et al., 270 F. 2d 241, 246 (C.A. 2, 1959).
http://www.sec.gov/rules/final/33-4552.htm
Monday, April 12, 2010
Emerging Markets in Which to Invest
According to the Brookings Institute, these are the top 20 cities in economic recovery:
1 - San Antonio, TX
2 - Rochester, NY
3 - Austin, TX
4 - Oklahoma City, OK
5 - Syracuse, NY
6 - Baton Rouge, LA
7 - Buffalo, NY
8 - Little Rock, AR
9 - Omaha, NE
10- Tulsa, OK
11- Dallas, TX
12- McAllen, TX
13- Washington, DC
14- Virginia Beach, VA
15- Albany, NY
16- El Paso, TX
17- Madison, WI
18- Augusta, GA
19- Kansas City, MO
20- Jackson, MS
What all of these cities seem to have in common is an increasing employment sector. While back in Seattle, the city lost 63,000 private sector jobs in the past year, a 4.4% decline that was one of the biggest drops in the country.
1 - San Antonio, TX
2 - Rochester, NY
3 - Austin, TX
4 - Oklahoma City, OK
5 - Syracuse, NY
6 - Baton Rouge, LA
7 - Buffalo, NY
8 - Little Rock, AR
9 - Omaha, NE
10- Tulsa, OK
11- Dallas, TX
12- McAllen, TX
13- Washington, DC
14- Virginia Beach, VA
15- Albany, NY
16- El Paso, TX
17- Madison, WI
18- Augusta, GA
19- Kansas City, MO
20- Jackson, MS
What all of these cities seem to have in common is an increasing employment sector. While back in Seattle, the city lost 63,000 private sector jobs in the past year, a 4.4% decline that was one of the biggest drops in the country.
Sunday, April 11, 2010
Exemption for Private Borrowing
Here are the relevant sections of federal law that provide an exemption for a real estate investor or club to borrow funds for real estate investment:
Section 4(2) of the Securities Act exempts from registration "transactions by an issuer not involving any public offering." To qualify for this exemption, the purchasers of the securities must:
• have enough knowledge and experience in finance and business matters to evaluate the risks and merits of the investment (the "sophisticated investor"), or be able to bear the investment's economic risk;
• have access to the type of information normally provided in a prospectus; and
• agree not to resell or distribute the securities to the public.
In addition, you may not use any form of public solicitation or general advertising in connection with the offering.
The precise limits of this private offering exemption are uncertain. As the number of purchasers increases and their relationship to the company and its management becomes more remote, it is more difficult to show that the transaction qualifies for the exemption. You should know that if you offer securities to even one person who does not meet the necessary conditions, the entire offering may be in violation of the Securities Act.
Rule 506, another "safe harbor" rule, provides objective standards that you can rely on to meet the requirements of this exemption. Rule 506 is a part of Regulation D, which we describe more fully on page 24.
D. Regulation D
Regulation D establishes three exemptions from Securities Act registration. Let's address each one separately.
Rule 504
Rule 504 provides an exemption for the offer and sale of up to $1,000,000 of securities in a 12-month period. Your company may use this exemption so long as it is not a blank check company and is not subject to Exchange Act reporting requirements. Like the other Regulation D exemptions, in general you may not use public solicitation or advertising to market the securities and purchasers receive "restricted" securities, meaning that they may not sell the securities without registration or an applicable exemption. However, you can use this exemption for a public offering of your securities and investors will receive freely tradable securities under the following circumstances:
• You register the offering exclusively in one or more states that require a publicly filed registration statement and delivery of a substantive disclosure document to investors;
• You register and sell in a state that requires registration and disclosure delivery and also sell in a state without those requirements, so long as you deliver the disclosure documents mandated by the state in which you registered to all purchasers; or,
• You sell exclusively according to state law exemptions that permit general solicitation and advertising, so long as you sell only to "accredited investors," a term we describe in more detail below in connection with Rule 505 and Rule 506 offerings.
Even if you make a private sale where there are no specific disclosure delivery requirements, you should take care to provide sufficient information to investors to avoid violating the antifraud provisions of the securities laws. This means that any information you provide to investors must be free from false or misleading statements. Similarly, you should not exclude any information if the omission makes what you do provide investors false or misleading.
Rule 505
Rule 505 provides an exemption for offers and sales of securities totaling up to $5 million in any 12-month period. Under this exemption, you may sell to an unlimited number of "accredited investors" and up to 35 other persons who do not need to satisfy the sophistication or wealth standards associated with other exemptions. Purchasers must buy for investment only, and not for resale. The issued securities are "restricted." Consequently, you must inform investors that they may not sell for at least a year without registering the transaction. You may not use general solicitation or advertising to sell the securities.
An "accredited investor" is:
• a bank, insurance company, registered investment company, business development company, or small business investment company;
• an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
• a charitable organization, corporation or partnership with assets exceeding $5 million;
• a director, executive officer, or general partner of the company selling the securities;
• a business in which all the equity owners are accredited investors;
• a natural person with a net worth of at least $1 million;
• a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
• a trust with assets of at least $5 million, not formed to acquire the securities offered, and whose purchases are directed by a sophisticated person.
It is up to you to decide what information you give to accredited investors, so long as it does not violate the antifraud prohibitions. But you must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If you provide information to accredited investors, you must make this information available to the non-accredited investors as well. You must also be available to answer questions by prospective purchasers.
Here are some specifics about the financial statement requirements applicable to this type of offering:
• Financial statements need to be certified by an independent public accountant;
• If a company other than a limited partnership cannot obtain audited financial statements without unreasonable effort or expense, only the company's balance sheet, to be dated within 120 days of the start of the offering, must be audited; and
• Limited partnerships unable to obtain required financial statements without unreasonable effort or expense may furnish audited financial statements prepared under the federal income tax laws.
Rule 506
As we discussed earlier, Rule 506 is a "safe harbor" for the private offering exemption. If your company satisfies the following standards, you can be assured that you are within the Section 4(2) exemption:
• You can raise an unlimited amount of capital;
• You cannot use general solicitation or advertising to market the securities;
• You can sell securities to an unlimited number of accredited investors (the same group we identified in the Rule 505 discussion) and up to 35 other purchasers. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated - that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment;
• It is up to you to decide what information you give to accredited investors, so long as it does not violate the antifraud prohibitions. But you must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If you provide information to accredited investors, you must make this information available to the non-accredited investors as well;
• You must be available to answer questions by prospective purchasers;
• Financial statement requirements are the same as for Rule 505; and
• Purchasers receive "restricted" securities. Consequently, purchasers may not freely trade the securities in the secondary market after the offering.
E. Accredited Investor Exemption - Section 4(6)
Section 4(6) of the Securities Act exempts from registration offers and sales of securities to accredited investors when the total offering price is less than $5 million.
The definition of accredited investors is the same as that used in Regulation D. Like the exemptions in Rule 505 and 506, this exemption does not permit any form of advertising or public solicitation. There are no document delivery requirements. Of course, all transactions are subject to the antifraud provisions of the securities laws.
Section 4(2) of the Securities Act exempts from registration "transactions by an issuer not involving any public offering." To qualify for this exemption, the purchasers of the securities must:
• have enough knowledge and experience in finance and business matters to evaluate the risks and merits of the investment (the "sophisticated investor"), or be able to bear the investment's economic risk;
• have access to the type of information normally provided in a prospectus; and
• agree not to resell or distribute the securities to the public.
In addition, you may not use any form of public solicitation or general advertising in connection with the offering.
The precise limits of this private offering exemption are uncertain. As the number of purchasers increases and their relationship to the company and its management becomes more remote, it is more difficult to show that the transaction qualifies for the exemption. You should know that if you offer securities to even one person who does not meet the necessary conditions, the entire offering may be in violation of the Securities Act.
Rule 506, another "safe harbor" rule, provides objective standards that you can rely on to meet the requirements of this exemption. Rule 506 is a part of Regulation D, which we describe more fully on page 24.
D. Regulation D
Regulation D establishes three exemptions from Securities Act registration. Let's address each one separately.
Rule 504
Rule 504 provides an exemption for the offer and sale of up to $1,000,000 of securities in a 12-month period. Your company may use this exemption so long as it is not a blank check company and is not subject to Exchange Act reporting requirements. Like the other Regulation D exemptions, in general you may not use public solicitation or advertising to market the securities and purchasers receive "restricted" securities, meaning that they may not sell the securities without registration or an applicable exemption. However, you can use this exemption for a public offering of your securities and investors will receive freely tradable securities under the following circumstances:
• You register the offering exclusively in one or more states that require a publicly filed registration statement and delivery of a substantive disclosure document to investors;
• You register and sell in a state that requires registration and disclosure delivery and also sell in a state without those requirements, so long as you deliver the disclosure documents mandated by the state in which you registered to all purchasers; or,
• You sell exclusively according to state law exemptions that permit general solicitation and advertising, so long as you sell only to "accredited investors," a term we describe in more detail below in connection with Rule 505 and Rule 506 offerings.
Even if you make a private sale where there are no specific disclosure delivery requirements, you should take care to provide sufficient information to investors to avoid violating the antifraud provisions of the securities laws. This means that any information you provide to investors must be free from false or misleading statements. Similarly, you should not exclude any information if the omission makes what you do provide investors false or misleading.
Rule 505
Rule 505 provides an exemption for offers and sales of securities totaling up to $5 million in any 12-month period. Under this exemption, you may sell to an unlimited number of "accredited investors" and up to 35 other persons who do not need to satisfy the sophistication or wealth standards associated with other exemptions. Purchasers must buy for investment only, and not for resale. The issued securities are "restricted." Consequently, you must inform investors that they may not sell for at least a year without registering the transaction. You may not use general solicitation or advertising to sell the securities.
An "accredited investor" is:
• a bank, insurance company, registered investment company, business development company, or small business investment company;
• an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
• a charitable organization, corporation or partnership with assets exceeding $5 million;
• a director, executive officer, or general partner of the company selling the securities;
• a business in which all the equity owners are accredited investors;
• a natural person with a net worth of at least $1 million;
• a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
• a trust with assets of at least $5 million, not formed to acquire the securities offered, and whose purchases are directed by a sophisticated person.
It is up to you to decide what information you give to accredited investors, so long as it does not violate the antifraud prohibitions. But you must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If you provide information to accredited investors, you must make this information available to the non-accredited investors as well. You must also be available to answer questions by prospective purchasers.
Here are some specifics about the financial statement requirements applicable to this type of offering:
• Financial statements need to be certified by an independent public accountant;
• If a company other than a limited partnership cannot obtain audited financial statements without unreasonable effort or expense, only the company's balance sheet, to be dated within 120 days of the start of the offering, must be audited; and
• Limited partnerships unable to obtain required financial statements without unreasonable effort or expense may furnish audited financial statements prepared under the federal income tax laws.
Rule 506
As we discussed earlier, Rule 506 is a "safe harbor" for the private offering exemption. If your company satisfies the following standards, you can be assured that you are within the Section 4(2) exemption:
• You can raise an unlimited amount of capital;
• You cannot use general solicitation or advertising to market the securities;
• You can sell securities to an unlimited number of accredited investors (the same group we identified in the Rule 505 discussion) and up to 35 other purchasers. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated - that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment;
• It is up to you to decide what information you give to accredited investors, so long as it does not violate the antifraud prohibitions. But you must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If you provide information to accredited investors, you must make this information available to the non-accredited investors as well;
• You must be available to answer questions by prospective purchasers;
• Financial statement requirements are the same as for Rule 505; and
• Purchasers receive "restricted" securities. Consequently, purchasers may not freely trade the securities in the secondary market after the offering.
E. Accredited Investor Exemption - Section 4(6)
Section 4(6) of the Securities Act exempts from registration offers and sales of securities to accredited investors when the total offering price is less than $5 million.
The definition of accredited investors is the same as that used in Regulation D. Like the exemptions in Rule 505 and 506, this exemption does not permit any form of advertising or public solicitation. There are no document delivery requirements. Of course, all transactions are subject to the antifraud provisions of the securities laws.
Friday, April 9, 2010
Advertising for Private Lenders
Remember our investor looking for private funds on my previous blog post?
According to Brad Ferber in the Securities Division of the WA State Department of Financial Institutions, it is questionable whether s/he should be making a public announcement at a general meeting of real estate investors, as this would be considered to be general solicitation or advertising of securities. This goes for advertising over the association message board or list-serve. Advertising of securities is not allowed, except under regulated circumstances.
Investors looking for equity partners or private funds may be considered to be selling a security, or serving in a role as an investment adviser. These activities are all regulated by the Securities and Exchange Commission.
There is however an exemption for "one-on-one transactions," where an investor approaches an individual, with whom he has a business or personal relationship, for funds or equity shares in an investment property. There must be some kind of pre-existing relationship - which may be as simple as the exchange of business cards.
However, the law becomes murky when the investor approaches more than one partner, as now the offering becomes a "pool." Unfortunately, there are no clear guidelines on these private, "non-public" offerings. Generally an investor offering a non-public offering is exempted from the SEC registration requirements, on the assumption that the prospective partner knows the individual investor, has the potential to become adequately informed, and has access to information needed to make an informed decision. The partner hence does not need the required protection of securities registration.
The Federal exemption for non-public offerings is referred to as 4(2), and is self-executing (does not require filing). Washington State law covers this exemption in RCW21.20.320(1).
Be advised that the state employees at the Department of Financial Institutions are not authorized to provide legal advice! Best to consult a securities attorney, if you as an investor plan to be asking people for money to purchase real estate!
According to Brad Ferber in the Securities Division of the WA State Department of Financial Institutions, it is questionable whether s/he should be making a public announcement at a general meeting of real estate investors, as this would be considered to be general solicitation or advertising of securities. This goes for advertising over the association message board or list-serve. Advertising of securities is not allowed, except under regulated circumstances.
Investors looking for equity partners or private funds may be considered to be selling a security, or serving in a role as an investment adviser. These activities are all regulated by the Securities and Exchange Commission.
There is however an exemption for "one-on-one transactions," where an investor approaches an individual, with whom he has a business or personal relationship, for funds or equity shares in an investment property. There must be some kind of pre-existing relationship - which may be as simple as the exchange of business cards.
However, the law becomes murky when the investor approaches more than one partner, as now the offering becomes a "pool." Unfortunately, there are no clear guidelines on these private, "non-public" offerings. Generally an investor offering a non-public offering is exempted from the SEC registration requirements, on the assumption that the prospective partner knows the individual investor, has the potential to become adequately informed, and has access to information needed to make an informed decision. The partner hence does not need the required protection of securities registration.
The Federal exemption for non-public offerings is referred to as 4(2), and is self-executing (does not require filing). Washington State law covers this exemption in RCW21.20.320(1).
Be advised that the state employees at the Department of Financial Institutions are not authorized to provide legal advice! Best to consult a securities attorney, if you as an investor plan to be asking people for money to purchase real estate!
Thursday, April 8, 2010
Advertising Securities
"Hi, I'm an investor looking for private funds. I offer 12% interest on a short-term loan of less than one year, secured by real estate." Is this simple statement made at a real estate association meeting a violation of SEC or state laws?
Investors offering equity opportunities must not advertise as follows, according to PART 230—GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933:
(c) Limitation on manner of offering. Except as provided in §230.504(b)(1), neither the issuer nor any person acting on its behalf shall offer or sell the securities by any form of general solicitation or general advertising, including, but not limited to, the following:
(1) Any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio; and
(2) Any seminar or meeting whose attendees have been invited by any general solicitation or general advertising; Provided, however, that publication by an issuer of a notice in accordance with §230.135c or filing with the Commission by an issuer of a notice of sales on Form D (17 CFR 239.500) in which the issuer has made a good faith and reasonable attempt to comply with the requirements of such form, shall not be deemed to constitute general solicitation or general advertising for purposes of this section; Provided further, that, if the requirements of §230.135e are satisfied, providing any journalist with access to press conferences held outside of the United States....will not be deemed to constitute general solicitation or general advertising for purposes of this section.
§ 230.135c Notice of certain proposed unregistered offerings. (a) For the purposes only of section 5 of the Act, a notice given by an issuer required to file reports pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 ....is making or has made an offering of securities not registered or required to be registered under the Act shall not be deemed to offer any securities for sale if:
(1) Such notice is not used for the purpose of conditioning the market in the United States for any of the securities offered;
(2) Such notice states that the securities offered will not be or have not been registered under the Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements....
§ 230.135a Generic advertising. (a) For the purposes only of section 5 of the Act, a notice, circular, advertisement, letter, sign, or other communication, published or transmitted to any person which does not specifically refer by name to the securities of a particular investment company, to the investment company itself, or to any other securities not exempt under section 3(a) of the Act, will not be deemed to offer any security for sale, provided:
(1) Such communication is limited to any one or more of the following:
(i) Explanatory information relating to securities of investment companies generally or to the nature of investment companies, or to services offered in connection with the ownership of such securities,
(ii) The mention or explanation of investment companies of different generic types or having various investment objectives, such as balanced funds, growth funds, income funds, leveraged funds, specialty funds, variable annuities, bond funds, and no-load funds,
(iii) Offers, descriptions, and explanation of various products and services not constituting a security subject to registration under the Act: Provided, That such offers, descriptions, and explanations do not relate directly to the desirability of owning or purchasing a security issued by a registered investment company,
(iv) Invitation to inquire for further information, and
(2) Such communication contains the name and address of a registered broker or dealer or other person sponsoring the communication.
(b) If such communication contains a solicitation of inquiries and prospectuses for investment company securities are to be sent or delivered in response to such inquiries, the number of such investment companies and, if applicable, the fact that the sponsor of the communication is the principal underwriter or investment adviser in respect to such investment companies shall be stated.
(c) With respect to any communication describing any type of security, service, or product, the broker, dealer, or other person sponsoring such communication must offer for sale a security, service, or product of the type described in such communication....
§ 230.251 Scope of exemption. A public offer or sale of securities that meets the following terms and conditions shall be exempt under section 3(b) from the registration requirements of the Securities Act of 1933 (the “Securities Act”):
(a) Issuer. The issuer of the securities:
(1) Is an entity organized under the laws of the United States ... with its principal place of business in the United States or Canada;
(2) Is not subject to section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (15 U.S.C. 78a et seq. ) immediately before the offering....
(4) Is not an investment company registered or required to be registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq. );
....
(6) Is not disqualified because of §230.262.
(b) Aggregate offering price. The sum of all cash and other consideration to be received for the securities (“aggregate offering price”) shall not exceed $5,000,000....
What does this all mean? Can our hypothetical investor at the top of this blog advertise for private funds or not? Is his offering a security? For answers to these and other related securities registration questions, stay tuned to this blog!
Investors offering equity opportunities must not advertise as follows, according to PART 230—GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933:
(c) Limitation on manner of offering. Except as provided in §230.504(b)(1), neither the issuer nor any person acting on its behalf shall offer or sell the securities by any form of general solicitation or general advertising, including, but not limited to, the following:
(1) Any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio; and
(2) Any seminar or meeting whose attendees have been invited by any general solicitation or general advertising; Provided, however, that publication by an issuer of a notice in accordance with §230.135c or filing with the Commission by an issuer of a notice of sales on Form D (17 CFR 239.500) in which the issuer has made a good faith and reasonable attempt to comply with the requirements of such form, shall not be deemed to constitute general solicitation or general advertising for purposes of this section; Provided further, that, if the requirements of §230.135e are satisfied, providing any journalist with access to press conferences held outside of the United States....will not be deemed to constitute general solicitation or general advertising for purposes of this section.
§ 230.135c Notice of certain proposed unregistered offerings. (a) For the purposes only of section 5 of the Act, a notice given by an issuer required to file reports pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 ....is making or has made an offering of securities not registered or required to be registered under the Act shall not be deemed to offer any securities for sale if:
(1) Such notice is not used for the purpose of conditioning the market in the United States for any of the securities offered;
(2) Such notice states that the securities offered will not be or have not been registered under the Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements....
§ 230.135a Generic advertising. (a) For the purposes only of section 5 of the Act, a notice, circular, advertisement, letter, sign, or other communication, published or transmitted to any person which does not specifically refer by name to the securities of a particular investment company, to the investment company itself, or to any other securities not exempt under section 3(a) of the Act, will not be deemed to offer any security for sale, provided:
(1) Such communication is limited to any one or more of the following:
(i) Explanatory information relating to securities of investment companies generally or to the nature of investment companies, or to services offered in connection with the ownership of such securities,
(ii) The mention or explanation of investment companies of different generic types or having various investment objectives, such as balanced funds, growth funds, income funds, leveraged funds, specialty funds, variable annuities, bond funds, and no-load funds,
(iii) Offers, descriptions, and explanation of various products and services not constituting a security subject to registration under the Act: Provided, That such offers, descriptions, and explanations do not relate directly to the desirability of owning or purchasing a security issued by a registered investment company,
(iv) Invitation to inquire for further information, and
(2) Such communication contains the name and address of a registered broker or dealer or other person sponsoring the communication.
(b) If such communication contains a solicitation of inquiries and prospectuses for investment company securities are to be sent or delivered in response to such inquiries, the number of such investment companies and, if applicable, the fact that the sponsor of the communication is the principal underwriter or investment adviser in respect to such investment companies shall be stated.
(c) With respect to any communication describing any type of security, service, or product, the broker, dealer, or other person sponsoring such communication must offer for sale a security, service, or product of the type described in such communication....
§ 230.251 Scope of exemption. A public offer or sale of securities that meets the following terms and conditions shall be exempt under section 3(b) from the registration requirements of the Securities Act of 1933 (the “Securities Act”):
(a) Issuer. The issuer of the securities:
(1) Is an entity organized under the laws of the United States ... with its principal place of business in the United States or Canada;
(2) Is not subject to section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (15 U.S.C. 78a et seq. ) immediately before the offering....
(4) Is not an investment company registered or required to be registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq. );
....
(6) Is not disqualified because of §230.262.
(b) Aggregate offering price. The sum of all cash and other consideration to be received for the securities (“aggregate offering price”) shall not exceed $5,000,000....
What does this all mean? Can our hypothetical investor at the top of this blog advertise for private funds or not? Is his offering a security? For answers to these and other related securities registration questions, stay tuned to this blog!
Wednesday, April 7, 2010
Thinking about Selling?
Are you interested in selling or investing in real estate?
I am an investor specializing in real estate investment in the Seattle metro area. I’d like to invite you to participate and profit in this business, along with me and my partners. I am looking for properties, people and investing partners. You may be interested.
My partners and I plan to purchase several single family and multi-unit properties this year, and we could use your help. We believe this is the right time to be buying Seattle area property.
My investment partners and I own several properties in the Seattle area. We specialize in buying properties in today’s down market, often purchasing properties through techniques that allow sellers to receive more income than traditional closing methods. We can provide a passive income stream, deferral of taxes, or freedom from debt, fix-up costs and/or repairs. That means that in today’s skittish lending market, we can close without relying on conventional financing.
We typically buy properties in “as is” condition that other realtors won’t list or can’t sell. My partners and I look for properties to fix and sell, or hold and rent, improving the neighborhood and offering new buyers or residents the chance to live in a nicer community. As a broker, I am able to list properties for sellers that do not meet our purchase criteria and for whom a retail sale is the best option.
Perhaps you or someone you know is thinking of selling a property? Perhaps there are vacant or trashy properties that are pulling down values in the neighborhood? We want to hear about them!
We are looking for partners who help us find these people and properties, or who want to invest in real estate as part of our team. If you are interested or know someone who may be, please contact me at 888-621-4999.
I am an investor specializing in real estate investment in the Seattle metro area. I’d like to invite you to participate and profit in this business, along with me and my partners. I am looking for properties, people and investing partners. You may be interested.
My partners and I plan to purchase several single family and multi-unit properties this year, and we could use your help. We believe this is the right time to be buying Seattle area property.
My investment partners and I own several properties in the Seattle area. We specialize in buying properties in today’s down market, often purchasing properties through techniques that allow sellers to receive more income than traditional closing methods. We can provide a passive income stream, deferral of taxes, or freedom from debt, fix-up costs and/or repairs. That means that in today’s skittish lending market, we can close without relying on conventional financing.
We typically buy properties in “as is” condition that other realtors won’t list or can’t sell. My partners and I look for properties to fix and sell, or hold and rent, improving the neighborhood and offering new buyers or residents the chance to live in a nicer community. As a broker, I am able to list properties for sellers that do not meet our purchase criteria and for whom a retail sale is the best option.
Perhaps you or someone you know is thinking of selling a property? Perhaps there are vacant or trashy properties that are pulling down values in the neighborhood? We want to hear about them!
We are looking for partners who help us find these people and properties, or who want to invest in real estate as part of our team. If you are interested or know someone who may be, please contact me at 888-621-4999.
Sunday, April 4, 2010
Easter Sunday Waterfront Open Houses
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Saturday, April 3, 2010
Equity Partner Wanted!
I am looking for an equity partner to replace my hard money loan on my waterfront property on 120' of saltwater frontage on a tidal bay of west Puget Sound.
I can work with two types of equity partners. One type is the person who can qualify for a $250,000 mortgage, but prefers to invest with NO money out-of-pocket. I pay the out-of-pocket expenses and do the work necessary to prepare an investment property for sale or rental. This works well for people that have good incomes from a job, are looking for additional tax deductions, but have limited time or funds to invest.
Another type of equity partner has funds to invest, but limited time or interest in being actively involved in real estate investment decisions. They prefer to loan out excess cash in exchange for a great rate of return, secured by a property with low Loan-To-Value ratios. In either case, I would be looking to secure either a $250,000 mortgage partner, or a $250,000 cash partner.
My mortgage partner would need to qualify as a 75% tenant-in-common owner. As the current tax-assessed value of the property is $378,000, a 75% share (LTV) would be equivalent to $283,500. In effect, I am selling a 75% interest for a discount of $33,500.
Exit Strategy:
I would pay all out of pocket costs for the loan, and cover all mortgage payments, ideally for a five-year interest-only $250,000 non-owner-occupied mortgage at less than 7%. Interest payments would be $1458 per month, plus $450 for taxes and insurance, for a total of approximately $1900 per month.
Option One - Straight Rental:
Rentometer estimates that the house will rent by the room for $1900 per month ($1300 upstairs with three bedrooms), and $600 downstairs (one bedroom), with shared kitchen. If the rooms were rented furnished, or if a small kitchen were constructed downstairs, it would be possible to achieve greater rental income. But this income, along with tax depreciation, should cover monthly payments. Owners would have 24/7 access to all common areas and any vacant rooms.
Option Two – Lease Option:
A tenant buyer would rent the house for $2400 per month, with $400 per month being credited towards the purchase price, which would be set at the current tax-assessed value of $378,000. They would have two years in which to exercise their option to purchase the house at this price. They would put down a non-refundable option fee of $5000 towards the purchase price (if they do not exercise their option, I like to offer $500 as a refundable security deposit as incentive to leave the house in good condition). I would split option fee, monthly income and tax depreciation with my mortgage partner on the same basis as our ownership interest: 75%/25%. If they paid monthly rent on time, rent credits would total $9600 over two years ($400 X 24 months). Hence, their effective purchase price would be $363,400 ($378,000 - $5000 option fee - $9600 rent credits).
I will split any profits over my original purchase price of $325,000 with my equity partner. Hence, my partner would receive an additional $39,750 at closing (in the example above), when the buyer exercises their option to purchase, assuming there were no other deductions for expenses or vacancies during that time.
In the event the tenant-buyer decides not to exercise their option, we keep all the funds they have paid to date (except for any security deposit refund) and we sell it again, using the same technique (only with a potentially higher sales price).
Because we are working with a BUYER as opposed to a traditional TENANT, we can expect them to cover most all maintenance and repair costs, and to take better care of the house than a tenant would, often making improvements that remain with the house.
This is the option I would prefer to pursue, but use the straight rental as a fall-back until we find a qualified lease-option buyer.
Option Three:
Sell the property today for the current list price, and pay my equity partner 2 points ($5000) for the use of their funds. The house would continue to be offered for conventional sale as we enter the busy summer season, and the equity partner would have the option to cash out if a conventional offer was received prior to a lease-purchase offer.
OPEN HOUSE ON EASTER SUNDAY FROM 2-4 PM: 2525 Rocky Point Road NW, Bremerton 98312. Live music, refreshments, and FREE lists of waterfront property priced under $400K! For more info on the house, see: www.2525RockyPointRoadNW.com
Friday, April 2, 2010
Taking Action
I am consistently impressed by the speed with which serious investors recognize a good opportunity and jump on a deal. Obviously, with more experience, it gets easier to recognize a good deal. But there is more to it than that. The savvy investor is compelled to take action while others sit on the sidelines and wait.
Whenever I post a lead on our local investor message board that I know to be a good value, I will very rapidly hear from some of the top names in our local investor community. Often, I will hear ONLY from a handful of the top investors on a hot deal. Why? Where are the hundreds of other wannabee investors that were given the same information, and the same amount of time to respond?
The early bird gets the worm, and the most successful investors are people of action. First, they have a very clear picture of what they want. When something meets their criteria they are poised to strike. Less successful investors do not have a clear idea of what they seek, and therefore fail to recognize an opportunity upon which the savvy investors spring.
Savvy investors know that leads may turn into transactions, and that a good lead is worth pursuing. Savvy investors are willing to pay for warm leads, as they know this is more cost-effective than pursuing cold leads.
Savvy investors ask for what they want. Today I met with a brand new investor, a brand new member of our local real estate association. He contacted me, and asked for help. He was busy educating himself, and in addition to joining the local real estate investment association, he had invested in one real estate system, and was busy reading everything he could on the topic of real estate investing. Along the way, he came across my monthly articles in the association newsletter, and then started reading these blogs. Then he did something that very few other people have the courage to do:
He picked up the phone, and dialed my number. And asked if I was still willing to take on an apprentice.
Action. He took it. And that gesture alone assures me that he is one who will succeed.
Get off the sidelines and into the game. The spoils go to he or she willing to take action....
Whenever I post a lead on our local investor message board that I know to be a good value, I will very rapidly hear from some of the top names in our local investor community. Often, I will hear ONLY from a handful of the top investors on a hot deal. Why? Where are the hundreds of other wannabee investors that were given the same information, and the same amount of time to respond?
The early bird gets the worm, and the most successful investors are people of action. First, they have a very clear picture of what they want. When something meets their criteria they are poised to strike. Less successful investors do not have a clear idea of what they seek, and therefore fail to recognize an opportunity upon which the savvy investors spring.
Savvy investors know that leads may turn into transactions, and that a good lead is worth pursuing. Savvy investors are willing to pay for warm leads, as they know this is more cost-effective than pursuing cold leads.
Savvy investors ask for what they want. Today I met with a brand new investor, a brand new member of our local real estate association. He contacted me, and asked for help. He was busy educating himself, and in addition to joining the local real estate investment association, he had invested in one real estate system, and was busy reading everything he could on the topic of real estate investing. Along the way, he came across my monthly articles in the association newsletter, and then started reading these blogs. Then he did something that very few other people have the courage to do:
He picked up the phone, and dialed my number. And asked if I was still willing to take on an apprentice.
Action. He took it. And that gesture alone assures me that he is one who will succeed.
Get off the sidelines and into the game. The spoils go to he or she willing to take action....