When considering selling a home, the savvy homeowner must be aware of the costs associated with such a sale. While these costs can vary depending on the location of the home, many of the costs are universal.

First and foremost, if there is a mortgage lien on the home that hasn’t been satisfied, the balance will be deducted from the proceeds of the sale. This also includes any second or additional mortgages. The lender will compute the actual balance due through the date of the sale and provide this information to the title company in advance.

Property taxes are also calculated through the date of sale and deducted from the proceeds. If there is an outstanding property tax bill, this too will be deducted from the seller’s portion of the proceeds at closing. The property taxes must be current in order for the sale to be finalized.

If the seller obtains the services of a professional real estate agent, the commission which was negotiated will be paid to the broker at the time of closing.

A title insurance policy must be purchased by the seller ensuring that the home is being transferred to the new home buyer with a clear title. The cost of title insurance is based on the sale price of the home.

In some localities, utilities must be paid through the date of closing. For example, the water company may come out to take a final meter reading just before closing and notify the title company of the final water bill due and owing. This bill will be deducted from any proceeds the seller may net at the time of closing.

The seller will also be charged a governmental transfer tax which will vary by municipality.

Another governmental charge will be the cost of releasing the mortgage, if any. This fee is usually fairly minimal.

If there is a judgment against the seller, it’s possible that any net proceeds from the sale of the home could be applied to said judgment. This would also include any mechanic’s lien that have been placed against the property.

Attorneys fees are also charged to the seller at closing, if these fees have not been paid in advance. At minimum, an attorney is required to prepare the Warranty Deed and Green Sheet to ensure proper transfer of the property.

An optional charge would be a home warranty offered to the home buyers. In most instances, this is paid for by the seller and is deducted from the proceeds. Offering this warranty may help sell a house faster.

It is in a seller’s best interest to speak to a professional like an experienced home buyer or Realtor to obtain a more precise estimate of charges for their particular region. This will allow the seller to compute the difference between the potential sale price of their home, and the expenses that will be incurred, to accurately review their bottom line. Bear in mind, if the expenses exceed the purchase price, the seller will be required to bring funds to the closing table to cover those expenses. Therefore, it is imperative that a seller be aware of the true costs associated with selling their home, whether they live in a larger city like Philadelphia or a smaller rural area in the Midwest.

Source by Joshua Weidman

There are many reasons why someone would want to invest in Philadelphia Real Estate. First, This city is one of the oldest cities in America with a history of immigrants dating back to the 1500s. There are many historical buildings that are several hundred years old dispersed in various areas of this large city. The buildings are original and mesmerizing and have a sense of empowerment over its viewers.

Its historical architecture is usually found only in countries with longer histories than the United States, for example, China, Italy, or Mexico. However, in America, not many cities can rival its architecture. Philadelphia's beautiful old properties make you remember that America, considered a relatively newer country, has a strong and deep history and is the birthplace of America.

Investing in Philadelphia real estate may be of interest to art lovers as well. It is also becoming the art center of America. The University of the Arts, one of the leading arts schools in the America, is centrally located here. This university has played a major role in the past ten years in marketing this city as a leading city in the arts. There is also a large mural program in the city named the City of Philadelphia Mural Arts program. Since this program began in 1984, they have painted over 2,400 murals on the sides of buildings. This has added an artistic perspective to livening up the older buildings in the city.

Also, the newly constructed building called the Kimmel Center has added value to the artistic movement. The Kimmel Center for the Performing Arts and the Academy of Music serve as home to eight Resident Company performing arts organizations, including The Philadelphia Orchestra, Opera Company of Philadelphia, Pennsylvania Ballet, Chamber Orchestra of Philadelphia, American Theater Arts for Youth, PHILADANCO, Philadelphia Chamber Music Society and Peter Nero and the Philly Pops.

Another reason for investing in Philadelphia real estate is that Philadelphia is that it is a city of brotherly love. The community relationships that are developed when staying here are priceless. Yes, Philadelphiaians are known to be a little rough, but do not let their poker faces fool you. They are very proud of their people and are always trying to help one another. When you live here you will feel like you belong to something. Although most homes are row home style and space is tight, this adds to the unique experience.

Another reason for investing in Philadelphia real estate is the convenience. This city is convenient to anything that you want. If you are driving, the convenience factor is even higher. In the heart of the city, you are close to every restaurant that you can imagine, malls, shopping centers, entertainment, and much more. The nightlife is also very fun. There are many clubs and bars along Columbus Boulevard, South Street, and many other areas throughout the city. This city has one of the best entertainment options throughout the country.

A final reason for investing in real estate here is its value. The real estate market here has been significantly underpriced for many years compared to its neighbor New York. There are plenty of opportunities to buy your dream home through the city regardless of your income. If you are just starting out and do not have much money, there are many inexpensive Philadelphia homes for sale that can be perfect starter homes. On the more expensive end, there are properties that are in the mega-millions. So if you do have the money to spend, relax ….. the options are limitless.

Philly has it all …

convenience, history, arts, architecture, entertainment, and value, amidst countless more reasons to buy real estate in Philadelphia.

Be a part of American history and come stay and experience what America is really all about.

Invest in Philadelphia real estate!

Source by Arthur Abcus

The Philadelphia Eagles are one of the oldest franchises in the entire National Football League. Over the years, there have been some great players that have played for the team too. The Eagles as a team have played in a number of great, even important, games over the years. Here is a look at five things you may not know about the Philadelphia Eagles.

1. The Philadelphia Eagles joined the NFL as an expansion team in 1931, replacing the Frankford Yellow Jackets which had gone bankrupt. The team’s name was inspired by the eagle insignia of President Franklin Delano Roosevelt’s National Recovery Act.

2. The first touchdown pass that quarterback Donovan McNabb ever threw in the NFL was thrown to Chad Lewis and came in the fourth quarter of a 44-17 loss to the Indianapolis Colts in the 11th game of the 1999 season.

3. No Philadelphia Eagles player has gone to more Pro Bowls than linebacker Chuck Bednarik went to eight during his career (1950-54, 1956-57, and 1960). Tied for second on the list at seven Pro Bowls apiece are defensive back Brian Dawkins and defensive lineman Reggie White.

4. The college that the Eagles have drafted the most players out of over the course of their existence in the NFL is Notre Dame. Twenty-eight players have come from Notre Dame over the years. Three colleges are tied for second on the list with 21 players each being selected in the draft by Philadelphia: Penn State, Texas, and USC.

5. The Philadelphia Eagles have had some great running backs over the years, but one of the team’s best runners was quarterback Randall Cunningham who played for the team from 1985 to 1995. On the team’s career rushing yards list, Cunningham ranks 5th behind Duce Staley, Steve Van Buren, Brian Westbrook, and Wilbert Montgomery. Some of the many players that Cunningham ranks in front of on the team’s career rushing yards list include Ricky Watters, Timmy Brown, Keith Byars, Charlie Garner, Herschel Walker, Anthony Toney, Correll Buckhalter, Heath Sherman, and Swede Hanson.

The Philadelphia Eagles have a prd a proud oud fan base istory inthe NFL. After so many years as one of the more important teams in the league, it is safe to say that they will continue to be both a favorite and influential team in the future too.

Source by Mark Peters

For many of the people most critical of Allen Iverson’s historically lax attitude towards authority there is a sense of justice in seeing a man who for so long acted as if the rules of society did not apply to him being forced to come to grips with his own diminishing abilities. Iverson’s naysayers came to feel like Karma was finally catching up to the player nicknamed The Answer when he was traded from the Denver Nuggets early in the 2008-2009 season. The trade that sent Allen Iverson to the Detroit Pistons marked the beginning of the end of the career of one of the most talked about players in NBA history.

Allen first arrived in Denver after acting out as a Philadelphia 76er player during the 2005-2006 season where at one point he refused to play unless he was dealt to the team that he wanted to play for (at the time the Denver Nuggets). Iverson’s complete disregard for team interests combined with turning his back on the franchise and city that built him up and adored him immediately lost him a great deal of followers. Despite individual scoring success in Denver (averaging roughly 25 points per game) the team hit a plateau and Iverson was shipped to the Detroit Pistons in exchange for team leader and defensively minded guard Chauncey Billups. Billups brought a much improved work ethic to the Denver Nuggets and led the team to successes Iverson was never able to achieve there.

While Chauncey Billups flourished in Denver Iverson was completely ineffective in the more team centric style of basketball that had been successful in Detroit for years. Allen Iverson’s scoring immediately dropped while at the same time his pouting increased. Iverson’s disagreeable nature went to a new high when he lost his spot in the starting lineup and the team’s record proved out that the Detroit Pistons were far more successful with him out of the lineup. Iverson got angry at his coach and did not hide his selfish frustrations while adopting the position that he would rather fake an injury and be at the games in street clothes than come off the bench. No one ever accused Allen Iverson of supporting (or even getting to know) his teammates in the latter part of his career.

When the lonely Memphis Grizzles were the only team willing to pick up Allen Iverson going into the 2009-2010 season (after the Pistons cut him) his career hit a new low. Despite initially acting like he would make the most of his new opportunity in Memphis Iverson became intolerant of his coach in Memphis when his playing time wasn’t as significant as he wanted. Iverson’s frustration in Memphis ended quickly when he was waived by the team after only three games due to distracting nature of his attitude relative to his lack of productivity on the basketball court. For the first time in Allen’s career no team wanted him, including arguably the worst team in the league in the Memphis Grizzlies. The Sixers eventually resigned Allen on December 2, 2009 knowing full well that the primary motivation in taking him back was to sell more seats and merchandise within the confines of a franchise that is no longer able to compete for NBA Championships.

Exactly how Allen Iverson will be remembered in the years to come remains to be seen. It is likely that he will always be a polarizing figure with one fraction commending his toughness throughout his career as an undersized competitor while another camp simply will not get over selfishness acts that they believe tarnished his career on the court.

Source by Jeff Bank

It’s shocking how even experienced multifamily investors refer to the cap rate as the end-all, be-all end-all metric. But in all actuality, it is nothing more than a measure of value at a moment in time.

Taken in isolation, it can range from deceitful to unhelpful.

When you are looking at the cap rate, you are seeing a stabilized property’s natural rate of return for a single year, without considering the debt on that property.

Now, is most commercial real estate bought with cash—or is it purchased with a healthy dose of financing?

Since my multifamily deals are done with financing, I find a metric meaningless when it doesn’t take into account the returns after debt-service.

So why would anyone tout the glories of a high cap rate?

A Higher Cap Rate Means Higher Returns, But…

Yes, investors prefer higher returns.

But typically, higher cap rate properties are lower quality properties. So in that sense, cap rate is a measure of risk in the deal. And you’ll want to understand risk-adjusted returns to compare potential investments across different markets.

In a market like the U.S. Midwest, liquidity and economic prospects are comparatively low, so investors may need to see high returns right off the bat.

But other markets offer the chance for value appreciation in the future.

Think of coastal U.S. cities or massive hubs like Hong Kong and London. They have global investors fighting to buy the limited amount of assets that exist in those areas. As a result, they are highly liquid investment markets. The demand places upward pressure on prices and leads to low cap rates.


Related: 5 of Your Most Burning Questions About Cap Rate, NOI & More—Answered

These markets also tend to have strong economic growth factors. This makes it possible for owners to increase rents, relative to market, with weaker fundamentals.

Picture an asset with obvious mismanagement or deferred maintenance. The rents and the cap rate are not where they should be—an opportunity.

Value-Add Multifamily Deals Expect Lower Cap Rates

Going back to our original definition, the cap rate applies to stabilized properties. But putting together a value-add deal means looking for multifamily properties that have not hit a stabilized level. It’s why they are interesting in the first place.

As investors, we are looking to increase the cap rate after purchase. This is because we will increase value through forced appreciation. OK, then, does that mean the cap rate is actually important, but that you should just be looking for currently under-valued rates?

Not so fast.

Now, it might be easy to become obsessed with the exit cap rate (a.k.a. terminal value). You get into a deal that estimates a much higher exit rate than acquisition rate because you are buying a slick value-add property.

But the future buyers don’t care that you bought an asset at “below market” rates. At exit, the asset will still be priced at its prevailing market rate, then paid accordingly.

And since we’re considering all this at the start of the deal, you are working with a projection. Nothing more.

So the real point is that there are more important metrics to consider.

(Nearly) All Metrics Can Be Gamed

Now, the usual boilerplate says that I should declare the actual metric that should be deified instead of the cap rate. But I can’t do that. No one can.

When scribbling notes for this article, I wanted to tie it all up nicely so it would “feel right.”

But that would be horsesh*t. The real takeaway is that feelings don’t matter and that no metric is king in isolation.

Still, we must act on available deals, so I’ll leave you with a brief consideration of some impactful metrics—along with their specific blind spots.


IRR/Equity Multiple

In place of cap rate, the savvy investor jumps to IRR (internal rate of return) or equity multiple. The theory goes that the higher the exit cap, the lower the IRR/equity multiple metrics.

IRR can be vastly interesting, and that is where it is risky.

There are a lot of moving parts: purchase price, exit price, rent growth, debt terms, etc.

Related: Sorry, But Cap Rates and Cash-on-Cash Are Worthless When Evaluating Multifamily

So the expanse gives cover for a seller or syndicator to game the numbers. At worst, it can mean someone more or less saying, “Oh, you don’t like the IRR? Well, give me a second… there, how about now?”

I personally look to the equity multiple as a pure measure of wealth.

It says, plainly, that for every dollar you put in, you get a dollar plus X back. No discounting. No fancy math. There is some clarity when starting with the equity multiple.

However, the simplicity of that metric means it does not account for time. To explain, I will have a lot of takers if I say 10x dollars after one year. Not so much after 10 years.

Discount Cash Flow (DCF)

The measure of value across time is best left to another article, but it is usually represented by the discount cash flow (DCF) analysis.

DCF is the gold standard—and least used—measure of valuing commercial real estate.

So, at the risk of tying up a complicated topic too neatly, I would say that once you start ignoring the cap rate, you can start focusing on the equity multiple and then work your way through the DCF calculations.

If it wasn’t a bit of a grind, do you really think it would be such a sound investment stream?

Simplistic cap rate analysis is alluring, yes. But as you demand real results, start looking for the more meaningful metrics.

What metrics do you prefer—and why?

Weigh in with a comment!

Source link

Everything was going swimmingly for RealtyShares just over a year ago. The real estate crowdfunding startup has just purchased one of its biggest rivals, Acquire Real Estate, and had plans to grow its investment in commercial and multifamily real estate. But now, RealtyShares has fallen on hard times and will be laying off much of its staff and stop accepting new investments on its platform.

Source link

Unison Home Ownership Investors aims to give homeowners and buyers access to cash for the opportunity to share in their home appreciation. In business for more than a decade, the company has been a pioneer in the homeownership investment category. Now, it’s growing into new markets through a new partnership with Goldwater Bank.

Source link

When I decided to launch a podcast almost two years ago, I wanted to give entrepreneurs and investors a place to learn life lessons from a different point of view. I wanted to talk about failure. 

So I called this wealth-building podcast How to Lose Money. And I have to say that it brings puzzled looks or hesitation from those who first hear about it. (Is he kidding? What’s the punchline? Has he been eating too much semi-boneless ham… again?)

We are all inspired by great stories of success. We love those rags to riches tales where someone like you and me pulled themselves up by their bootstraps to become a business success, sometimes even a legend or a billionaire. I’ve often written about life lessons from people like Warren Buffett and Bill Gates—and there’s certainly a lot to learn there.

But over the years, I’ve realized that it can be easier to avoid failure than to achieve success. And sometimes avoiding failure—or at least learning from it over and over—paves the road for the success we all seek.

I once heard about a guy who was waiting for a flight. He told the guy in the next chair about his brainchild for a new startup. The guy later mailed him a check for a million dollars. They both made millions and lived happily ever after.

That’s a Great Story, But How Do I Replicate That?

Do I spend more time in airports hoping for wealthy people to tell my story to? I would probably learn more from this guy’s struggles and failures along the way than from this story.

Though all successful people have failure in their past, they seem less apt to talk about it at conferences, in their books, and at dinner parties. I think this is sad, because it can discourage those of us who are trying to learn from them.

My daughter, Hannah, and I used to attend an annual father-daughter retreat put on by a family-oriented organization at Callaway Gardens in Georgia. It was a beautiful place to enjoy a relaxed time together amidst a 6,500-acre nature preserve with lakes, woods, meadows, and a butterfly pavilion.

The speakers were all “successful” fathers who talked of their wonderful children and their creative parenting practices. They had pictures of their smiling families and their adventures to exotic places that most of us couldn’t afford. One of them even told how he planned to do a space flight with his daughter someday. (He was hoping we’d contribute.)


Though it was compelling, I noticed that it caused a bit of discontent in Hannah. And I often left the conferences feeling a mix of motivation… and discouragement.

After years of attending each spring, Hannah admitted to me that she was jealous of some of the daughters whose fathers spoke, and she secretly wished she could be part of their families from time to time. “They always go on these amazing outings and adventures, and they don’t seem to fight and argue like our family does at home.”

Less Than Perfect

And though I left these events with a list of things to do better, I was discouraged because my failures and shortcomings were ever before me, and it seemed like these guys had no roadblocks along their paths. I sensed from the “average” fathers around my table that they felt the same. “I’ll never be like those guys. Why even try?”

At one point, I got to know one of the main speakers. He was a great guy and had a heart for his kids and for the legacy that his family would leave on the earth. But in talking to his daughters, I learned that they had similar struggles as my kids. They argued, and had insecurities, and their family was actually—gasp—less than perfect.

I should have known this. But I was a young dad who was passionate to be a great dad—I had stars in my eyes. What I (and perhaps the speakers) didn’t realize was that it is important for successful people to talk about their failures along the way. Otherwise, those watching will be discouraged and think that success like that is out of reach.

Gary Keller (founder of Keller Williams) was once asked about the definition of success. Keller wisely said, “Success is failing over and over again without giving up.”

Keller says we don’t succeed our way to success, but we fail our way there. He says that whether it’s Michael Jordan being cut from his high school basketball team or Walt Disney being fired from a newspaper for his “lack of imagination,” when you look at history’s greatest successes, you’ll realize they are built on a series of failures.

After several years of attending the father-daughter retreat, I began to question the speakers on their practice of not sharing their struggles and failures. I wasn’t alone.

Share Your Struggles

In a Q&A panel session one day, someone approached the mic and said, “You guys are all great men and great fathers. We’ve heard lots of great stories and techniques for being better husbands, fathers, and men. Can you share some of your struggles?”

You could have heard a pin drop. The five men on the panel looked like a herd of deer in 500 pairs of onlooking headlights. After chuckling nervously, one of them gave a lame reply, completely dodging the question. “My great struggle is to get the next generation to catch my vision for fatherhood” or something ridiculous like that.

He was the guy I knew, and he is a good man. But somehow the micro-culture there had no tolerance for discussing failure.

Related: My One-Word Answer to: What Separates Those Who Succeed From Those Who Fail, Give Up, or Never Try?

I shouldn’t have been surprised when some of these families who had long kept their struggles private began to fall apart (very publicly) a few years later. I can’t pretend to know all the reasons, but I have to believe that there was a lot of pressure in those circles to keep up a good image. Sort of like the pressure I hear a lot of pastors’ and other public people’s children feel.

My daughter and I were no longer jealous, and we learned some valuable lessons.

  • Everyone struggles.
  • Everyone fails.
  • No one is perfect.
  • Every successful person’s path is lined with difficulties and setbacks along the road to the top.
  • Anything or anyone that looks perfect from the outside is certainly not.

I was determined never to forget these lessons.

So when Josh Thomas and I launched our wealth-building podcast, we decided to talk with successful people who would be willing to share their failures, struggles, losses, doubts and fears along the way.

We’ve had a blast doing almost 150 How to Lose Money podcast episodes. We’ve talked to…

  • The Harvard MBA who lost $70 million when the tech bubble burst
  • The real estate investor and BiggerPockets member who lost $225,000 in a wire transfer fraud
  • The real estate investor and BiggerPockets member who learned that his out of state single family rental was a meth house
  • Two different BiggerPockets members who lost big money buying real estate in a third world country
  • Gary Keller’s business partner who emotionally told us how he lost money by following the crowd in his industry

And listeners have gotten to hear about some of my trials and failures as well. Like…

  • The time my friends and I sent almost a million dollars down a hole in the ground… that turned out to be more like a toilet than a successful oil well
  • The time I invested $100,000 with the Charlotte entrepreneur who was making 3% per month trading currency. He will won’t tell me or his other 2,000 investors where he hid the $18 million… and he is in year 17 of his 153-year federal prison sentence
  • The wireless internet startup from hell, the instant coffee business in the Ohio State laundromat, the multi-level scheme that distracted my focus for six months and more

Virtually every person we’ve asked to be on the show has agreed to come on and share their failures. Afterward, they often tell us they found liberation and joy when they shared the details of these events that had usually happened years or even decades earlier. They sometimes get emotional as they share how they have lost money, time, relationships and companies along their journey.

Related: 3 Reasons So Many Real Estate Investors Fail

Our guests have also shared how these painful experiences have taught them not to fear failure again. Every one of them bounced back. Every one of them is successful now. And surprisingly, virtually every one of them says they’re glad it happened.

These experiences were critical in shaping them into the person who is now able to handle the weight of the success they’re achieving today. These struggles and failures basically built a strong framework on which the trials and temptations of success can now hang securely. This is one of the great purposes of trials in our lives.

An ancient sage said, “We rejoice in our sufferings because we know that suffering produces perseverance; and perseverance produces character; and character produces hope.”

I don’t want any of us to get bogged down by our past mistakes or those of others. But I want to encourage us all to learn from those mistakes and avoid the traps that we or others fell into in the past. And remember the words of Gary Keller:

“Success is failing over and over again without giving up.”

Trials will either make you bitter or make you better.

What are they producing in your life today? 

Source link

LaSalle Investment Management, a real estate investment manager and a wholly owned subsidiary of Jones Lang LaSalle, is making a big play in the commercial real estate debt market. LaSalle announced Monday that it entered into an agreement to make a majority acquisition of the $1.2 billion debt fund business of Latitude Management Real Estate Investors, a commercial real estate lender.

Source link

I am sitting on an airplane. My family is with me. We are flying to Hawaii. Tonight we are going to see a good friend, Darren Sager. It’s been a while and we are excited! And in another two days, we’ll see another good friend, Brandon Turner. We are notably less excited about Brandon, as you can imagine, but have made peace. 

We are meeting in Hawaii to mastermind. All three of us have been increasingly active in real estate over the past year, and once in a while, a getaway like this is necessary.

Now, while we are here to work out some plans, at least one day will be more play than work. Darren turns 50 next week!

Overall, this trip has a bit of a surreal flavor for me. You see, I like clarity. I like definiteness. There is nothing less appealing to me than lack of definiteness. And yet, that’s exactly how I feel. I feel like I am stuck in no man’s land. Darren, let’s face it, is an older guy. I mean, a quite good-looking and accomplished, but an older guy.

Brandon is just a baby. 

And then there is me—at 43, neither this nor that.

What am I? How do I fit in? Am I not old yet, or am I not so young anymore? Am I just starting, or am I finishing?

That feeling of not knowing your place that I am trying to describe is prevalent among new investors. I certainly felt it in my day.

So, today, with some very simple advice, I am trying to clear up that feeling for you newbies as it relates to one of the most important aspects of REI: raising money. When you are done reading this article, you will have clarity!


To Preface This Discussion

In the world of real estate investing, we have two main hurdles to clear: finding deals and finding money to finance those deals. Both are challenging, and both are often used as an excuse to not get into the game. There was a time not so long ago when finding deals was easy, but funding was hard. Some people used that as a reason to stay on the sidelines. Today, funding is everywhere, but good deals are not.

I am telling you this to forewarn against excuses. Excuses are easy to find in any cycle if you look hard enough. The question should never be why should I not do this; the question is how can I do this?!

Related: 6 Aspects of Real Estate Investing You MUST Understand Before Your First Deal

How to Raise Money

This is where I tell you that I am not a licensed professional and cannot offer specific legal advice. I am going to outline to you my understanding of the laws in very generalized terms. But, please, seek professional advice from a qualified licensed professional.

That said, as you should know by now the SEC is rather specific as to who you can and cannot ask, why, and how. But, the reality is that if you don’t ask you don’t get, and that’s not an option. With this in mind…

What Does SEC Want?

What the SEC really has a big problem with is a combination of these words: general solicitation. Now, this is not always an issue, but to be totally clear of any wrongdoing, if you can simply avoid doing things that can be described as general solicitation, you should be just fine.

To me this easier let’s consider this one word at a time. What is “general”?

Well, the easiest way to understand that is in terms of relationships. If there is no pre-existing relationship, then the relationship is general.

What is “solicitation”?

Well, asking for money is solicitation.

What is general solicitation?

General solicitation is you asking for money from people with whom you do not have a standing relationship.

If you do not do something that is both “general” and “solicitation” at once then you should be fine.

How This Works in Real World

Suppose you are at a party and someone you hadn’t previously met asks you what you do. And you answer that you pool money together from people to buy large apartments and that you’ve been really busy lately because you are under contract to purchase another asset.

Now, since you don’t really know the person you are speaking to, this relationship should most likely be considered general. You are OK, though, because first of all, you are not making a public announcement—you are speaking to one individual. Secondly, you are not triggering the conversation, but merely answering a question posed to you. And lastly, there is no solicitation going on here. You are not asking for money. You are not offering up an investment opportunity. You are simply telling this person what you do.

So, you should be OK.

Another Situation

The following weekend you get together for a brunch with three friends and you proceed to tell them about the opportunity to invest in your deal. This time, you actually are offering them to invest. However, this is totally legal as well, because you are talking to a group of friends—people with whom you’ve had a standing relationship.

Related: 7 Life-Changing Lessons I Wish I Knew as a Real Estate Newbie

Remember, what gets you in trouble is the “General + Solicitation.” You can have general conversations without soliciting, and you can solicit from pre-existing relationships. You just can’t solicit money from strangers, at least not under Reg D 506b.

What About Social Media?

Well, I am not a huge fan. It’s true if your post on Facebook goes out under the setting which permits only your friends to see it, then I suppose you can argue that you are talking to people with whom you have a pre-existing relationship, making it OK to solicit. I get uneasy with this, though. How well do you know your FB friends? Have you had meaningful contact with all of these people?

Do you see the thin line?


You have to ask for money if you are going to succeed in real estate investing. But, next time you are about to ask, or about to make that post on a social network, just remember—what gets you in trouble is general + solicitation.

Any questions about general solicitation?

Ask them below!

Source link