Crowdfunding Update and What to Do for Now by Bruce E. Methven

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If you missed it during the holidays, unfortunately the SEC has indicated that it will not issue its final rules for crowdfunding or for Reg. A+ offerings until October of 2015.  In addition, final regulations generally take effect 60 days after being officially published in the Federal Register.  That means the earliest that these types of offerings will be allowed is a year from now, in January 2016. 

 

"Crowdfunding" here means offerings where lower-level investors can purchase stock, LLC units or promissory notes.  This is different than what is touted currently as "crowdfunding."  The current version is advance sales of goods (pay now, often at a discount, and receive the goods later when they've been manufactured) or promotional items or recognition for the money. 

 

In addition, the tea leaves indicate that the SEC is under immense pressure to NOT follow its preliminary Reg. A+ rule.  That preliminary rule would prevent the states from requiring that an offeror also obtain state approval of an offering in excess of $5 million even though the SEC has already approved it.  It's possible that the recent Republican capture of the U.S. Senate might cause a different result, but that seems unlikely given that state regulators and specific Senators are vehemently opposed to the preliminary rule. 

 

In any case, the question for now is:  What can companies and real-estate funds do now to raise investor money that both allows full public advertising and does not require that the investors all be accredited (as the year-old Rule 506c offering does)? 

 

The practical choices are a federal S-1 offering or the current Reg. A offering – both of which can lead to the securities being traded on the over-the-counter market – or a single state qualification by permit.  These require some explanation and will be discussed in the next email/blog-post after this one. 

 

Companies that DON'T need full public advertising can make a traditional Rule 506b offering.  Basically a company can contact potential investors it reasonably believes to be accredited or sophisticated and any type of foreign investor about the offering.  A company can also post information on web sites and social-media sites about what the company does and about this type of investing.  (It cannot provide information about past, current or future offerings, though.)  Those sites can also ask viewers to respond to an investor questionnaire – and the company can provide information about the offering if the responder seems to be accredited or sophisticated (or foreign).  This should not be done without guidance from an attorney, though, as it's easy to cross over into prohibited solicitation.  A subsequent email/blog-post will discuss this in more detail as well.   

 

Bruce E. Methven

 

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Disclaimer and Distribution

The foregoing content constitutes general information only and should not be relied upon as legal advice.
You are welcome to copy and distribute this document for non-commercial purposes, but it may not be edited and the prior warning and the following must be left on it:

Bruce E. Methven, 2232 Sixth Street Berkeley, CA 94710
Phone: (510) 649-4019; Fax: (510) 649-4024
www.TheCaliforniaSecuritiesAttorneys.com
CaliforniaSecuritiesAttorneys[at]gmail.com
Copyright 2015 Bruce E. Methven, All Rights Reserved.

 

 

Amendments to Offerings by Bruce E. Methven

Amendments to Offerings by Bruce E. Methven

 

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What does a company do if it has started an offering and then finds that it needs to significantly alter the information provided to investors or change the terms of the offering?  Those changes call for action regarding two groups, the securities regulators and the investors. 

 

With respect to the securities regulators, much depends on whether the offering is using registration or an exemption from registration.  Registrations require prior approval from a regulator and include things like a federal S-1 offering or a state qualification by permit.  Exemptions, for example a federal Rule 506 offering, do not require approval but do require that forms be filed with the regulator(s). 

 

If the offering is registered, generally the amendment first must be presented to the securities regulator for approval. 

 

If the offering is using an exemption from registration, frequently nothing needs to be done unless the change affects information on any forms that have been filed.  In that case an amended form needs to be submitted.  With a Rule 506 offering, for example, Form D must be filed with the SEC.  If the change to the offering requires changes in the prior information provided on Form D, an amended Form D must be filed.  No approval is needed from the regulator, though; all that has to be done is make the filing. 

 

Investors are another matter.  If there are updates or material changes to an offering, the private placement memorandum (aka the offering circular or prospectus) should be amended or revised -- at least for those who have not yet invested. 

 

For those who have already invested, if there are changes that negatively affect a prior investor's rights or there is information that should have been disclosed previously (versus new information), often the best approach is to make the new disclosures to the prior investors and give them an opportunity to withdraw their investment if they wish.  Assuming a prior investor wishes to stay despite the changes, something in writing signed by that investor should be obtained. 

 

On the other hand, if the changes positively affect prior investors' rights (or are neutral) and do not constitute information that was required to be disclosed originally (perhaps because those events had not yet taken place), there likely is no legal requirement that they be informed, much less that their additional consent be obtained.  Still, it is always good practice to keep investors current regarding developments with the offeror, so in most cases the changes are presented to the prior investors in the form of a letter or an email.   

 

Bruce E. Methven

 

*****************************************

 

Ebook

My eBook "Raising Money – Legally" is available at Amazon.

(To see the table of contents, click on the image of the book and then scroll down.)

There are "free Kindle reading apps" for many devices online.

 

More Articles Online
For more information on securities laws, head to Background on the Securities Laws:

www.thecaliforniasecuritiesattorneys..com

 

Disclaimer and Distribution

The foregoing content constitutes general information only and should not be relied upon as legal advice.
You are welcome to copy and distribute this document for non-commercial purposes, but it may not be edited and the prior warning and the following must be left on it:

Bruce E. Methven, 2232 Sixth Street Berkeley, CA 94710
Phone: (510) 649-4019; Fax: (510) 649-4024
www.TheCaliforniaSecuritiesAttorneys.com
CaliforniaSecuritiesAttorneys[at]gmail.com
Copyright 2013 Bruce E. Methven, All Rights Reserved.

SEC Releases Proposed Regs for Crowdfunding – Bruce E. Methven

SEC Releases Proposed Regs for Crowdfunding – Bruce E. Methven

 

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Finally there are proposed SEC regulations for "true" crowdfunding as established by the JOBS Act!  (These are way past the deadlines set by the Act.)  We now have a much better idea how the SEC will handle crowdfunding that involves the sale of stock or promissory notes. 

 

The SEC released the proposed regulations on October 23.  There is a 90-day period for comments beginning when the proposed regulations appear in the Federal Register (which will be soon).  This type of crowdfunding will not be available, though, until after the SEC receives comments and issues final regulations. 

 

Although the JOBS Act language was ambiguous, in one bit of good news the SEC has clarified that up to $1 million may be raised by crowdfunding in a 12-month period without counting amounts raised by other exempt offerings.

 

On the other hand, amounts sold by entities controlled by the issuer or under common control with the issuer, as well as any amounts sold by any predecessor of the issuer, all count toward the $1 million crowdfunding limit.  In addition, an issuer cannot solicit purchasers for a concurrent separate offering by way of a crowdfunding offering or vice versa.  In a way, this may be thought of as a prohibition on a "bait and switch" with respect to simultaneous offerings.

 

There was also ambiguity about the two classes of investors for crowdfunding.  In another piece of good news, the SEC has clarified that under the proposed rules, only if both annual income and net worth are less than $100,000, then a limit of $2,000 or 5 percent of the investor's annual income or net worth, whichever is greater, applies. If either annual income or net worth exceeds $100,000, then a limit of 10 percent of the investor's annual income or net worth, whichever is greater, but not to exceed $100,000, applies.

 

The JOBS Act limits crowdfunding to issuers who, among other things, are organized under the laws of a state or territory of the United States or the District of Columbia (no foreign issuers), are not reporting companies (public companies required to file periodic reports with the SEC), and are not investment companies (no crowdfunding hedge funds!).

 

The proposed rules also exclude an issuer that has no specific business plan or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies – but this is pretty standard for offerings. 

 

Interestingly, the proposed regulations require issuers to disclose the amount of money the intermediary is being paid.  This may lead to some price competition among the intermediaries. 

 

For offerings of more than $500,000, the proposed rules require issuers to provide audited financial statements.  One question is whether this will nudge issuers who wish to raise more than $500,000 to other types of offerings that have no requirement of audited financials. 

 

Although a crowdfunding offering must be conducted through an intermediary, under the proposed rules an issuer could publish a notice advertising the terms of an offering provided that the notice includes the Internet address of the intermediary's platform.  The permitted notices would be similar to a brief "tombstone ad," but the issuer could distribute the notice by any means, including in newspapers or on social media sites.

 

In an intriguing approach, the SEC is not requiring issuers to set a fixed price initially – so dynamic pricing is allowed.  On the other hand, investors would have a reasonable opportunity to cancel the investment commitment after the price is fixed.

 

At least for the time being, crowdfunding portals will have to register both with FINRA and with the SEC.  Also, because of concerns about conflict of interest, an intermediary and its directors, officers and partners cannot have any financial interest in an issuer using its services.

 

The intermediary must obtain a background and securities enforcement regulatory history check on each officer, director, and person holding more than 20 percent of the outstanding equity of every issuer. 

 

Because the SEC wants to encourage potential investors to compare notes, the proposed rules require an intermediary to provide channels through which investors can communicate with one another (and with representatives of the issuer) about the offering.

 

Along these lines, the proposed rules would give investors an unconditional right to cancel an investment commitment for any reason until 48 hours prior to the deadline identified in the issuer's offering materials.

 

The proposed regs are available at http://www.sec.gov/rules/proposed/2013/33-9470.pdf and comments may be submitted at

http://www.sec.gov/cgi-bin/ruling-comments?ruling=s70913&rule_path=/comments/s7-09-13&file_num=S7-09-13&action=Show_Form&title=Crowdfunding. 

 

It will be very interesting to see the resulting public comments – and the SEC's final regulations.

 

Bruce E. Methven

 

*****************************************

 

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Disclaimer and Distribution

The foregoing content constitutes general information only and should not be relied upon as legal advice.
You are welcome to copy and distribute this document for non-commercial purposes, but it may not be edited and the prior warning and the following must be left on it:

Bruce E. Methven, 2232 Sixth Street Berkeley, CA 94710
Phone: (510) 649-4019; Fax: (510) 649-4024
www.TheCaliforniaSecuritiesAttorneys.com
CaliforniaSecuritiesAttorneys[at]gmail.com
Copyright 2013 Bruce E. Methven, All Rights Reserved.

Local Real Estate Deals TV

Just a quick shout to keep the beta testing going. Thanks to everyone who has logged on and checked out the system. GREAT FEEDBACK! We have already made it into the second round of changes so keep updating your account to see what changes have been made. This is ground breaking stuff and it is never easy standing on the cutting edge...Lots of change, lots of movement, but that is how the best things are formed...Stay the course and keep the faith!

Local Real Estate Deals DOT TV Station

Well, it's about time! That's all I have to say about the whole thing. It took considerably longer than I wanted, but not really that long in the big scheme of things, and it is finally in beta...That's right, www.LocalRealEstateDeals.tv is now online...how cool is that. We welcome your profiles and comments and feedback. Thanks for checking in...don't spend any more time here, just go to the website and upload your videos!!!

Regards,

Rob Cass
www.LocalRealEstateDeals.com

If you are not part of the solution, you are part of the problem!

I am still amazed at the amount of people out there that are sticking to their old ways and contributing to the same old problems. Frankly, I don't care who is responsible for the mortgage and real estate industry crisis...As far as I am concerned we are all, in some way, responsible for this mess we are in. To be absolutely clear, we don't have time to point fingers anymore, now is the time to stand up and make the decision to be a part of the solution.

I am also amazed at the lack of understanding about hard money. I know that I have some pretty strong opinions about many things, but it is in my humble opinion, that it is private money and hard money that is going to get us out of this mess, not institutional money.

Even among hard money lenders, the field isn't level. There are just as many good companies as there are bad ones, but I have, as I usually do, stumbled across a company that is not only leading the way, they are a major part of the solution. That company is Blazevic Funding Group http://www.blazevicfunding.com/ and they need to be recognized. Not only are they getting deals financed for investors, which by the way, is critically important to keep the heartbeat of our economy going, they are working with homebuyers as well. THAT'S WHAT I AM TALKING ABOUT! Here is a company in the middle of a doom-and-gloom economy and they are working with both sides to keep deals flowing! We should all be looking for ways to keep deals flowing.

I have had the chance to speak with them and they have great attitudes, even when things aren't going great. They have that "twinkle" in their eye (no, I haven't spoken to them in person) but you just get a sense from the folks at Blazevic that they know what they are doing and they are confident in their abilities and their role in the market place. Those are the kind of people that I need to rub elbows with on a regular basis.

So many individuals and companies are now fearful of becoming over leveraged or are worried that the market will go down even further. When you surround yourselves with the experts in the industry, you don't have to second guess every decision. You already have a team of professionals watching out for you and working with you to make sound decisions. These companies are out there, just talk to them and you will hear it in their voice and see it in their mannerisms. You will either hear scarcity, or abundance, but it is unmistakable.

If you are not sure what I am talking about, take a moment to listen for yourselves to see if you can "feel" the difference. Look them up online and just strike up a conversation with them. They are here for the long haul and they have a great outlook.
http://www.blazevicfunding.com/

Happy Investing!

Rob

http://www.LocalRealEstateDeals.com

Special Invitation available through Local Real Estate Deals Invitation Only

This is a special invitation to a private buying opportunity that is NOT available to the public:

PREMIUM "GO ZONE" BUYING OPPORTUNITY NEAR BILLION-DOLLAR MEGA PROJECT

========================================

Tuesday, August 18th, 6pm PST (9pm EST)

This link will take you to the deal overview and conference call number:

http://maverickinvestorgroup.com/deals/tarabrooke

To access the call: You must RSVP by using the discount code: "MIG LRED"

========================================

On August 18th, you will have the opportunity to make one of the most important financial decisions of 2009.

Four years ago Congress passed the most extraordinary tax incentive for real estate investors in the history of the United States that offered a 50% first year bonus depreciation for buying new rental properties in Gulfport, Mississippi as part of the "GO-Zone". But it all expires this year. Properties must have construction finished in 2009 in order to qualify so reservations have to be in by the end of August.

Amazingly, Gulfport just broke ground last month on a multi-billion dollar project to expand the Port of Gulfport to be the largest container port in the country! This will create 6,500 direct jobs plus 10,000 indirect jobs. And you can get exclusive access to a private buying opportunity featuring a premium subdivision in Gulfport with prices and terms not available to the public.

You will have the opportunity to buy in the tail end of a subdivision that is already about 80% filled-up with primary homeowners. The preferred property management company will guarantee you a tenant the day you close or they will pay you rent for up to 60 days until a tenant is found. And you can get over $70,000 in first year depreciation per property as part of the GO-Zone benefits.

Access is by invitation only. It all goes down on AUGUST 18th.

Click for deal overview and conference call number: http://maverickinvestorgroup.com/deals/tarabrooke

YOUR TICKET IN IS REGISTERING BY USING THE DISCOUNT CODE: "MIG LRED"

*Licensed Agents and Brokers: We pay a full 3% referral for every buyer that closes.

Happy Investing!

Rob

Real Estate Investing (Back to Basics)

I happened to stumble across a blog yesterday that was addressing all the great deals that were on the market. While I too tend to talk about all of the deals on the market, I forget, as we all seem to do that an appealing deal for one person, might be a money pit for the next person.

Sure, there are a lot of foreclosures on the market, and there are a lot of houses with equity on the market right now, but they don't automatically constitute a deal. The truth is that only YOU can determine if a deal is the right one for you. And the only way that you can be sure is to have a set of criteria that you use to evaluate each deal, that is tied directly to a goal that is defined in a business plan. So you see, all those deals out there might not actually be good deals for what you are trying to accomplish.

Make sure you didn't miss the part about having a set of criteria that you use to evaluate each deal. I completely enjoy the academic exercise of figuring out business systems and criteria. When you are done with the exercise, you are left with a keen sense of what it will take to keep moving forward at a sustained rate...and don't get me going about the sustainability of business plans...that is a whole topic in and of itself.

Alright folk, that's about all for now...Take care and happy investing.


Robert D. Cass

http://www.LocalRealEstateDeals.com

Real Estate Investing (Tour de France Style)

One of the most incredible sporting events has just come to pass and it held up to all of its usual glory. I am talking about the Tour de France, of course.

Many Americans do not completely understand the complex nature of cycling, never mind the mind-boggling, gut-wrenching, 3 week race in France every year. If you happen to watch it on tv at any given time, it just looks like a bunch of world class athletes riding their bikes all together. That is on the surface, but what is going on in the minds of those men is nothing short of amazing.

There is so much strategy and so much going on that you can't even begin to see everything that is going on. One of the things that strikes me most is that not everyone is there to win the tour. There are different races inside of the race and you have to be on your toes to know who is interested in what and why.

Lance Armstrong always has his sites on the podium when he goes into the tour, but there are others whose goal is to win as many stages as possible. These riders have no desire to win the overall race, just individual stages of the race.

This is not so different from Real Estate Investing...There is so much going on at any given time, that we need to know our game plan and stick to it. Even in this economy there is so much opportunity that it can be a distraction at times. That is why it is important to know which opportunities are real and which ones are not. Conversely, it is important to know the real threats when they present themselves and which ones are not worth responding to. Being able to distinguish the difference is a matter of reaching your goals or not, it is also the sign of the consummate real estate professional. When you worry about threats that are not real, or chase opportunities that are not leading you to your desired goal, you are wasting precious energy and risk losing it all.

Know what race you are in and why it is important to you. Study the competition and understand the real threats to your business. Don't rely on the spectators to tell you what the real threats and opportunities are for your business. Real estate is all about mental strategies and physical execution; not unlike the Tour de France.

Stay the course and remain focused. Healthy Investing!

Rob

http://www.LocalRealEstateDeals.com

Italian Cooking for Real Estate Invesors

I am just beginning to appreciate the subtleties of my heritage and how it applies to real estate and real estate investing.

As I was making tomato sauce for dinner this evening, it occurred to me that real estate is going through the same process that makes the best tomato sauce...reduction is the key word here.

I remember how amazed I was the first time I made my sauce from scratch, particularly, how much water is really in each tomato. It used to baffle me as to why my Nana would have to cook all day to make tomato sauce for all of the dishes she was cooking. The longer that you simmer your sauce, the richer the flavor and the more the flavors combine to give a full, rich taste.

The real estate market is doing the same thing right now. The market is simmering and has been simmering for some time. Too much heat ruins things...the key is to manage the heat and keep it at just the right temperature. The problem is that the real estate market was so hot for so long that it burned out. The same thing will happen to your sauce if you don't manage the heat...it will eventually burn.

Ok, this simmering effect has had its effect on the real estate population as well. While reduction in cooking removes all of the unnecessary water, the simmering in our industry has removed a lot of unnecessary middle men. What we are left with are the parts that make a rich flavorful, (wait we are talking about real estate)...what we are left with are the real estate professionals that are focused and driven to provide the best service in the market. The end result is a richer, more robust real and meaningful estate experience.

So while this may be a tough time for a lot of people, what we are going to end up with is a much better, cleaner, more efficient industry than before this happened. This simmering is a natural process that tends to bring out the best of the best...and YOU are one of the best.

Congratulations...Healthy Investing!

Rob

http://www.LocalRealEstateDeals.com

Plan your Business like a business plans

Ok, so I have a gripe...There are too many people out there that don't treat their real estate investing like a business. It kills me to hear about people and businesses that treat real estate investing like a hobby or a side job. There is way too much at stake to be moving forward without a plan.

Your plan doesn't have to be a 200-page dissertation on the state of the market either. But you should have some goals, milestones and some sort of way to track your success.

I used to think that your business plan was like the ten commandments, you know, carved into stone and never to be changed. Luckily, business plans are living documents and have to change and evolve. Your business plan should have enough flexibility to stand the test of time and weather many storms.

The truth of the matter is that your business and business environment are always changing so you need to have a tool that is flexible enough to guide you and give direction, but if it is taking you down the wrong path, you better be able to change course before you are completely derailed!

Even if you only have a one page business plan you should address the nature of your business, what your goals are (short-term, intermediate and long-term) and attach a metric that can be measured...when you use phrases like, I want to be successful or have a bunch of houses, this is useless, because there is no identifiable quantity to measure against. Be specific.

There was a time when I would start writing a business plan with words, but I like to think that I have evolved to the degree that I start out by building a proforma to see if the business makes sense from a monetary stand point. The words are the easy part, but if the business is not a viable venture in the first place, there is no reason to even write one word. My advice is to hunker down and put your business into a spreadsheet. The mere exercise will make you a better business person as you have to ask yourself if you have all of the right numbers in place and whether or not you can accomplish the financial goals you have set for your business.

Once you have a spreadsheet that tells the story of your business, run it past somebody who knows anything about your business to see what they think. It is always best to be conservative when you are running your numbers. It is easy to get caught up in scenarios that show how you are going to make millions of dollars per quarter, but there is usually something that has not been taken into consideration.

Anyway, take the time to write a very basic business plan...just a couple of pages will be worth its weight in gold if you review it on a weekly basis and use it as the planning tool that it is designed to be. Be flexible though, the business that you are in five years from now may not be the business you started out building, but you just might find that the business you intended to start was not a viable, sustainable business...but that the business you ended up running is sustainable and viable.

Good Luck and Healthy Investing to all!

Rob


http://www.LocalRealEstateDeals.com

The Patience of a Gardener

I have found a new joy that compliments my interests in real estate. Gardening...or more specifically, vegetable gardens.

It is a modest garden of watermelon, cantaloupes, tomatoes, summer squash and cucumbers, but the lessons I am learning are invaluable. Now that the season is in full-swing, my sons and I go out to the garden every evening to see what is ready to pick. My youngest son of 19 months is getting very good at determining what is ready to pick and what is not.

The watermelons have him fooled though. My youngest boy can't figure out why we aren't picking the things that are biggest in the garden. Even though the watermelon are far from being ready, they aren't ready to pick. Real estate is the same way. If you pick your exit too early, you miss the fruit of your labor; profits.

You see, sometimes we have to be just a little bit more patient, and remind ourselves that every deal is not the same and every situation is different. Find your deal, work it, tend to it, give it what it needs to bear fruit. Pick it too early and all is for naught...Maybe you should try gardening to keep your mind off things...just a thought.

Happy Gardening, errr, Investing...

http://www.LocalRealEstateDeals.com
Rob

Real Estate Compost Pile

Ever since we began talking about the "green edition" of our magazine, my son has been urging us to become a "greener" family. Considering he is in the third grade, this is an impressive and reasonable request.

We have taken up the greener lifestyle and I must say that it suits me well. One of my favorite green things to do is to contribute to our compost pile in the backyard. Last night as I was contributing the latest kitchen scraps to the pile I noticed that the pile was "cooking." Yep, it was about 132 degrees. HOT! or as they say in compost terminology, it was "cooking!"

That got me to thinking that the real estate industry is not so different; especially real estate investing. There are a lot of "scraps" left on the market right now and it is up to the real estate investment community to make things good again. Well, these are the properties that nobody can afford, or that need fixing up, or are just sitting around on the market. This is not good for a stumbling economy. What we need to do is to turn this "refuse" into fertile soil that we will allow us to rebuild the garden of our industry.

With my compost pile out back, I have been contributing for months, putting my lawn clippings in there along with kitchen scraps, and finally last night it began to cook. The same thing is going to happen in our real estate community. We just have to keep the faith and keep practicing fundamentally good transactions. In that way, we will be contributing to the come back of our industry.

The real estate investment community will inevitably begin heating up again, or "cooking" very slowly, but then it will turn into the hot market that it was and give off returns that will help spur the economy as well. These times that we are facing are only temporary and while we may not see it on a daily basis, the universe is already at work putting together the elements to the next great real estate boom.

Hang in there and take the good with the bad. Real estate investing is cyclical, just like any other natural occurrence.

Think of http://www.LocalRealEstateDeals.com like your real estate compost pile, throw in your deal listings and look for new ones. Together we will turn the tide around.

Rob

Show me the MONEY!

Traditional financing has been so readily available for so long that many investors never needed to get really creative. It in times like these that we need to tap our creative skills to find the money that we need to finance the deals that are out there….and there are indeed deals out there! If ever there was a time to be involved in real estate…THIS IS IT!

Hard Money…Yep, there is still plenty of hard money out there. My suggestion is to find a good source and make friends with them. Build their trust in you and your ability to give them a return on their investment and keep using the same source. These guys are regular people just like you and me and they are looking to make good deals. You have to remember that they make money by lending it and they don’t make money when they aren’t lending it…so, give them a reason to lend money to you and you will have your deals.

A couple of hard money sources that you may want to check out are:
www.blazevicfunding.com
www.EquityDevelopmentCorp.com

There are also Self-Directed IRAs that have been around a while and I am still amazed that many investors do not use this tool to invest in real estate. Check with the experts on this, but you can also work with other investors and their Self-Directed IRAs to pool your money to work on bigger deals or commercial deals. Not a bad way to go if you are in need of some capital at a great rate! Why not pay yourself the interest, rather than pay someone else…think about it…

And of course there are always the time tested 1031 exchanges to maximize your “NOW” money after a deal. There are pros and cons to 1031 Exchanges just like there are to all of the types of funding out there. Get familiar with them and use them like the tools they are to help you build your portfolio.

These, of course, are just a few of the alternative financial tools that are out there, you will want to become familiar with as many of them as possible. Knowing what money is out there and how to use it may just prove to be the fine line between success and failure.

Good Luck and Healthy Investing!

Rob
http://www.LocalRealEstateDeals.com

Dot Com Busted!

Who can forget the dot com bust of the new millenium? Apparently, millions of real estate professionals that's who! How is it that every time a new bubble appears on the horizon everyone and their brother forgets about the last bubble that busted or even worse, tells themselves that they are not in a bubble or that their industry is safe from bubbles...

Unbelievable...but it happened so there is no use fretting about it now. In my opinion, we need to buckle down and understand how each of us contributed in some way and how we can avoid this again. How do we do that? Personal accountability for starters. We can't control the whole industry, so we might as well control our own deals and actions.

Take the time to re-evaluate your business plan, if you have one. If you don't have one, create one. There is nothing complicated about it...keep it simple and realistic. I love to see a business plan that can be articulated in the form of a spreadsheet...words are nice, but numbers tell the real story. Make sure that your plan is sustainable. Sure, you might be able to make a killing on a particular deals, but how many times can you do that and furthermore, can you do that forever? The answer is probably not...so find a business or aspect of the business that you can maintain for an indefinite period.

Modest margins over the long-haul add up to more than you think. Just take the time and stay the course. The good news is that if you are still standing in the real estate industry today, you are doing something right. Keep up the great work and hang in there!

http://www.LocalRealEstateDeals.com

Creativity in a Free Market

There is a buzz going around about the latest bill that is threatening the way that real estate investors do business. It is sometimes scary that those who are making the laws are out of touch with the reality of the businesses that they effect through their system of government.

Fortunately, we know better. We know that they are not addressing the real problem, but rather they are putting hand cuffs on the wrong people. We have the luxury of operating from the spirit of abundance rather than the spirit of scarcity from which the laws were created.

We need to trust that we will collectively find better and newer ways to conduct business. These laws that have been and will continue to be passed are meant to help, not to hinder. So, they are created in the right spirit, but the letter of the law is not going to be effective. It will, no doubt, keep a few people from conducting real estate transactions and most of those people are the ones that should not be investing in the first place. It is also true that there are some good investors with good intentions that will also find it hard to keep investing. Unfortunately that happens as well.

By and large, the best thing we can do as a real estate investment community is to follow sound business and ethics practices in everything we do. The real estate industry has a black eye right now, and we are all going to pay a little bit of the price. Let's do the right thing and create win-win solutions in every transaction...that is the best way to counter the laws that are coming to us right now.

Good Luck and God Bless America!

Robert D. Cass

http://www.LocalRealEstateDeals.com

Ed Begley, Jr

You gotta love what you do! I can’t imagine doing anything else! I get to talk to the best and brightest minds in the business every day. I wake up in the morning and the first thing that pops into my head is…I GET to do this again! A few months ago, I had the opportunity to interview Ed Begley, Jr about his relationship with the green industry and it was so refreshing to talk to him. The guy is a regular guy and was very easy to settle down with and talk to.

 

It seems like that is the essence of success. Loving what you do and doing it with passion. Ed is all over the place, working here and there and supporting different companies and products and it finally occurred to me that this is a guy who loves what he does. You can’t be that active and busy and hate what you do…it just doesn’t work. In fact, it would drain you…but we have all me those people who seem like the more that they do, the more energy they have. Amazing isn’t it? Not if you step back and think about what is really happening. You can either give energy or get energy…and when you are doing something you love to do, you are attracting energy to you. When you are engaged in something you don’t love, you are contributing energy, with out getting any in return.

 

There are many lessons to learn from Ed, but the main one is to love what you do! Thanks Ed, we enjoyed speaking with you!

 

If you want to get the latest on Ed Begley, Jr…just click over to www.LocalRealEstateDealsMag.com and enjoy the magazine!

 

            Respectfully,

 

 

 

            Rob

 

 

 

 

http://www.LocalRealEstateDeals.com

Generating Wealth Velocity

 

 

            I had a chance to interview Matt Bowles, one of the partners of Maverick Investor Group http://www.MaverickInvestorGroup.com a few days ago and he mentioned a word in that interview that has been on my mind for the last few days…that word is VELOCITY! I love the word velocity when it is used in conjunction with wealth and real estate investing because it is not the same old tired phrase that most of us are tired of hearing…you know the one. ..OPM, or Other People’s Money…We all understand what OPM is and how to use it, but VELOCITY is a whole different story.

 

            Duing the interview, I had to stop and dwell on the point for a moment, and as usual, Matt obliged me. You see, when you are talking to an expert you have to listen closely and take notes. Everything that Matt says made so much sense, I had to slow him down to make sure I didn’t miss important facts. Keep in mind, I am in this industry and I consider myself an astute student, but sometimes I am amazed at the simplicity and focus of the people that I get to meet and rub elbows with…Matt is no exception…

 

            Ok, so he went on to explain that most people leverage their money fairly well. This point has been made by dozens of gurus and is a well-trodden path, but when you leverage your money AND your time, well, that is when you begin to experience the benefit of VELOCITY in your wealth building endeavors. The more I think about it, the more he is right. Think about it for a second, how many people do you know who have leveraged their money properly using real estate as the platform, but then they totally and utterly over-leverage their time, by becoming something they aren’t proficient (or even good) at…namely, being a landlord. Many of us have done so many good things, only to find ourselves in the miserable position of being a landlord and not doing the things that are going to bring us the biggest bang for our buck! How crazy is that? (Ans. Pretty Crazy!)

 

            Pay attention to your time and realize what is giving you the biggest return on your investment…chances are there is some room for improvement and the good news is that if you can find room for improvement, you can increase your Wealth Velocity!

 

Good Luck and Happy Investing!

 

Rob

 

http://www.LocalRealEstateDeals.com

Technology for the Sake of Technology

Who doesn't love technology? After all, many of us grew up watching cartoons like the Jetsons where every episode would show us what the future was going to be like...well, it hasn't happened exactly like that, but as a culture, we are still fascinated with technology.

While the technowizards are creating new technology, it is the marketing wizards who figure out how to apply that technology and that is where the real magic happens. You see, technology for the sake of technology is very James Bond, in that it doesn't have a real practical use in the real world. In order for technology to gain a foothold in the market it needs to have a practical application and solve a problem.

There are too many technologies out there that don't solve any problems and do not have a practical application. While the technology is very cool, what good is it if it doesn't make our lives easier or make us more effective?

Technology has to stand the test of time before I can adopt it. A year doesn't sound like a long time unless you are dealing with technology. The fact is that I don't pay much attention to anything that hasn't been out for at least a year. If it is still around after that, I will check it out which is nice because by that time the price is usually half of what it was when it came out. By that time there will have been enough upgrades to the software that the bugs would hopefully be worked out. Not only that, in a year, people and companies would have put the product throught the rigors of the real world and would have found interesting partnerships and applications. Oh yes, a year is a long time in the big scheme of things.

Beyond the product itself, you need to have a good grasp on the ten thousand foot view as well. If you are keeping an eye on the general feelings of a particular market place, you will be able to spot a really useful technology before the masses understand the applications. Don't feel inhibited to embrace new technology to see if it works and to meddle with it...If you do that, just don't jump off the deep end and make it a part of every aspect of your life until you see it in action. It is easy to be swept off your feet by new technology, but it has to make sense.

One of the things I look for when I am considering new technology is how well it fits into my current suite of technology and how well it integrates. This could be anything from an i-phone to twitter. If it doesn't mesh with what I am working with, then it doesn't make sense. Technology should not create problems, it should relieve problems. I know that isn't always the case, but my point is that it should certainly create less problems than it solves.

To that end, embrace technology by all means, just know that all technology is not necessarily worth embracing. If it can help increase your bottom line, then it is definitely worth looking into.

Happy Investing.

Rob

http://www.LocalRealEstateDeals.com

New Models

The real estate industry is one of the oldest industries around. As long as people have been around, there has been a need for them to have shelter. In an industry as "old" as this, it is tough to come up with anything new. Sometimes we have to look outside of our industry for inspiration.

Over the years I have become fascinated with business models. Each industry has its own model that follows a line of thinking and most people and companies line up behind that mode of thinking and go out and do business the same way. There is nothing wrong with that, in fact, it is a very smart and safe way to grow your business. Like I said, each industry has its own model, so it is always interesting to me to look at how different industries make money.

Every once in a while, I find a business-model nugget that I can apply to a situation in our own business that let's me address a problem that my old model couldn't or wouldn't address. As you explore different models and challenge the models of other industries you begin to learn a new language of problem solving and business modeling.

There is a company that I am quite fond of that has a unique approach to their own highly-competitive market, that company is Morgan-James Publishing. If you think real estate is brutal, you should take a look at the publishing industry...NO THANKS! Anyway, the founder of the company, David Hancock, does things differently. His company is known as The Entrepreneurial Publisher and they have created their own model that will no doubt serve as the new model for many companies. You see, they have dared to try something new...something that hasn't been done before. It is worth checking out their websiteto see what they are doing.
www.MorganJamesPublishing.com



My point is that we cannot expect to get better results by doing what we have done for years. We have to aggressively search for new ways to conduct business. We have to dare to try some things and understand that not everything is going to work. There are no guarantees, so we have to keep reinventing ourselves and look for inspiration outside of our industry if that is what it takes.

My suggestion would be to do some research on what IT, web and computer companies were successful after the dot com bust, to find out how the industry as a whole responded to the down turn in the economy and the market. We can learn from other industries and other mistakes as if they were our own if we pull our heads out of the daily grind and look around. There are golden lessons to be learned and they are your for the taking. By reviewing other models, we gain deeper insight into how we might move forward in a given situation where we otherwise might have be prone to make snap judgments that tend to make things worse.

We have our challenges, but the answers are out there! It is time to reinvent our businesses and in the mean time, reinvent the real estate industry.

We would love to know what you are doing different in the new economy.

Regards,

Rob

http://www.LocalRealEstateDeals.com