As a former Investment banker, I am seeking to gain partners in my theme resort with a minimun of investment of $300,000. And so I'm looking for information that recently came out on the structuring and selling of private placement offerings. Does anyone know if it is legal at this time to show memorandums to just anyone? Is there still a question of qualifying the prospect? What are the requirements in establishing a qualified investor? I do not believe it is needed if the offer or is an owner. Perhaps I should not offer a private placement offering and create a simple LLC and sell ownership to that LLC holding the investment or is this in violation of SEC rules? If I am offering a private placement of less than 30% of the project and the project is valued at $4,700,000, does the qualifying of the prosect? Does the investor need to prove his seasoning by cash reserves above the amount required or is he allowed to simply show borrowing capacity? Is there a better way?
1. I'm not sure if the moderators will allow a post like yours. You should probably put it in TCI realty. However, I'm not a moderator.
2. Read Own Your Own Corporation by Garrett Sutton, a book in Robert Kiyosaki's rich dad's advisor series.
3. RUN, don't walk, but RUN to a qualified attorney. What you are doing could potentially be a huge mess if it is not done right. However, the small fee paid to an attorney to do it right could yeild you a LOT of money.
Lowball you really do need to go to a real estateattorney in your area about your questions.
While there may be legal experts on this site, Im sure they would need more specifics about your deal......and of course some advice cost money.....
I agree with Myfrogger...pay the money to a local attorney......one you can contact if things go wrong.
This site offers great advice but the receiver needs to take heed to what they use.
The advice is most correct with the following suggestion.
I would make it all pretty, nice presentation even to cardboard models or even full modeling. Then the format you wish to follow Corporate wise.
Then to a local, local attorney who is qualified....
After which with the help of and advice of and possibly a lead from, the attorney, you make an appointment with a Venture Capitalist and let them front fund.
In accordance with their instruction start your project. Protect yourself as to the fine print as to future options to buy your interest.
If you are actively looking for investors to sell shares of a private company you better be darned sure you have both a PPM and make them sign a subscription agreement.
Additionally you can only sell to accredited investors, which means invidivuals with a net worth of over 1mil.
Definitly get with a SEC attorney if you are looking at rasing money this way.
One more very important thing. You can most likely create a company or partnership and have each investor as a partner without worrying about SEC problems, just don't sell shares, rather formthe Entity with the investors, that way you avoid any SEC problems.
There are a lot of issues here. In order to keep from having problems with the SEC, you need (not a real estateattorney) a securities attorney to guide you. Your private placement and limited circular offering must meet specific guidlines as to the number of investors, their sophistication, their net worth, the number of memoranda you can have, www.etc.etc.
You may be better off doing a limited partnership-which still pose a few problems in this particular case.
Now if you are looking to take your idea public then I can give you exactly how this is done, as I have taken companies public before. One of those companies I started with a Blind Pool where I paid $75K for a pool with $250K in it. Raised millions for a project I started with just a business plan.
However, as sammyvegas said you will be dealing with the SEC and you do start with a qualified SEC attorney.
Oh, yes my business plan was for the advent of online gaming.
You wanted someone that did 100 properties, why are you dealing with lightweights when you are looking to raise the kind of money you will need?
Fellow members here at TCI the ole cashman just couldn't let that one go by.
My past experience is that private placement offerings are easier to control and fund. You give up much less pie and can choose either or both an equity position as well as debt. I choose debt free and equity with a repurchase advantage.
However time is of the essence and I may just mortgage the resort and make those needed improvement.
You see the SEC attorney's that I spoke with this morning conflicted in their opinions. So I started searching the web for advise and came accross this message board. So the safe road is the one I'll take loan or partner.
What do you need?
We have many seasoned investors on here. What is your question?
As a former Investment banker, I am seeking to gain partners in my theme resort with a minimun of investment of $300,000. And so I'm looking for information that recently came out on the structuring and selling of private placement offerings. Does anyone know if it is legal at this time to show memorandums to just anyone? Is there still a question of qualifying the prospect? What are the requirements in establishing a qualified investor? I do not believe it is needed if the offer or is an owner. Perhaps I should not offer a private placement offering and create a simple LLC and sell ownership to that LLC holding the investment or is this in violation of SEC rules? If I am offering a private placement of less than 30% of the project and the project is valued at $4,700,000, does the qualifying of the prosect? Does the investor need to prove his seasoning by cash reserves above the amount required or is he allowed to simply show borrowing capacity? Is there a better way?
A few things:
1. I'm not sure if the moderators will allow a post like yours. You should probably put it in TCI realty. However, I'm not a moderator.
2. Read Own Your Own Corporation by Garrett Sutton, a book in Robert Kiyosaki's rich dad's advisor series.
3. RUN, don't walk, but RUN to a qualified attorney. What you are doing could potentially be a huge mess if it is not done right. However, the small fee paid to an attorney to do it right could yeild you a LOT of money.
GOOD LUCK
Good advice. However I've been doing Private placement for 20 years. The attorneys that I called this morning can not agree.
At this time I usually do development, and do not need to use private placement. Perhaps there is a simplier way.
Great advice Myfrogger,.......
Lowball you really do need to go to a
real estate attorney in your area about your questions.
While there may be legal experts on this site, Im sure they would need more specifics about your deal......and of course some advice cost money.....
I agree with Myfrogger...pay the money to a local attorney......one you can contact if things go wrong.
This site offers great advice but the receiver needs to take heed to what they use.
Good luck
Sundance Utah, now theres a fun place.
The advice is most correct with the following suggestion.
I would make it all pretty, nice presentation even to cardboard models or even full modeling. Then the format you wish to follow Corporate wise.
Then to a local, local attorney who is qualified....
After which with the help of and advice of and possibly a lead from, the attorney, you make an appointment with a Venture Capitalist and let them front fund.
In accordance with their instruction start your project. Protect yourself as to the fine print as to future options to buy your interest.
Thats it. Go Play Lucius
If you are actively looking for investors to sell shares of a private company you better be darned sure you have both a PPM and make them sign a subscription agreement.
Additionally you can only sell to accredited investors, which means invidivuals with a net worth of over 1mil.
Definitly get with a SEC attorney if you are looking at rasing money this way.
One more very important thing. You can most likely create a company or partnership and have each investor as a partner without worrying about SEC problems, just don't sell shares, rather formthe Entity with the investors, that way you avoid any SEC problems.
There are a lot of issues here. In order to keep from having problems with the SEC, you need (not a real estate attorney) a securities attorney to guide you. Your private placement and limited circular offering must meet specific guidlines as to the number of investors, their sophistication, their net worth, the number of memoranda you can have, www.etc.etc.
You may be better off doing a limited partnership-which still pose a few problems in this particular case.
Lowball.
Glad to meet you.
Now if you are looking to take your idea public then I can give you exactly how this is done, as I have taken companies public before. One of those companies I started with a Blind Pool where I paid $75K for a pool with $250K in it. Raised millions for a project I started with just a business plan.
However, as sammyvegas said you will be dealing with the SEC and you do start with a qualified SEC attorney.
Oh, yes my business plan was for the advent of online gaming.
You wanted someone that did 100 properties, why are you dealing with lightweights when you are looking to raise the kind of money you will need?
Fellow members here at TCI the ole cashman just couldn't let that one go by.
John $Cash$ Locke
PS: Almost forgot I took the company public.
John $Cash$ Locke
My past experience is that private placement offerings are easier to control and fund. You give up much less pie and can choose either or both an equity position as well as debt. I choose debt free and equity with a repurchase advantage.
However time is of the essence and I may just mortgage the resort and make those needed improvement.
You see the SEC attorney's that I spoke with this morning conflicted in their opinions. So I started searching the web for advise and came accross this message board. So the safe road is the one I'll take loan or partner.