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Author Topic: RentalStarter - A Midwest Real Estate Investment Company  (Read 119035 times)
memvola
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March 04, 2014, 12:50:06 PM
 #321

I am considering to invest some more in this but I can't seem to find a liquidation clause in the documents provided.

I hope I'm not getting this right, but as it stands, if the company decides to close up shop, 70% of all the assets will go to the issuer.

Can you elaborate on this?
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March 04, 2014, 01:06:53 PM
 #322

This is something interesting, I have some questions:
a. How do you hedge the currency risk? With rentals being denominated in USD, the actual dividend pay out will be depended upon the actual conversion rates.
b. Following from above, how do you decide on rates while paying the dividends? Will it be the actual market rates on 15th?

There's always currency risk in something like this until we start taking BTC as pay for rentals. I don't know when this will happen as everyone is paid in fiat for their jobs in my area.

We announce the dividends from the 10th-14th when we use the rates on that period for conversion.
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March 04, 2014, 01:07:44 PM
 #323

I am considering to invest some more in this but I can't seem to find a liquidation clause in the documents provided.

I hope I'm not getting this right, but as it stands, if the company decides to close up shop, 70% of all the assets will go to the issuer.

Can you elaborate on this?


At the moment we don't have a clause, but we could add one that would state that say 70% of the asset proceeds go to dividend holder, or otherwise they get the bulk of the proceeds from liquidation.
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March 04, 2014, 01:25:22 PM
 #324

I am considering to invest some more in this but I can't seem to find a liquidation clause in the documents provided.

I hope I'm not getting this right, but as it stands, if the company decides to close up shop, 70% of all the assets will go to the issuer.

Can you elaborate on this?


At the moment we don't have a clause, but we could add one that would state that say 70% of the asset proceeds go to dividend holder, or otherwise they get the bulk of the proceeds from liquidation.

why wouldn't 100% of the asset proceeds go to share holders?

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Branny
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March 04, 2014, 01:29:34 PM
 #325

I am considering to invest some more in this but I can't seem to find a liquidation clause in the documents provided.

I hope I'm not getting this right, but as it stands, if the company decides to close up shop, 70% of all the assets will go to the issuer.

Can you elaborate on this?


At the moment we don't have a clause, but we could add one that would state that say 70% of the asset proceeds go to dividend holder, or otherwise they get the bulk of the proceeds from liquidation.

why wouldn't 100% of the asset proceeds go to share holders?

If we liquidated the value say next month the value it would pay back to investors would be about 140% of current investment. To liquidate the properties it would take 3-6 months of work on my end (Or otherwise a liquidation firm is hired and paid 10%-20% of the gross capital, most of the time they only get 70% of ARV on properties, so that means investors would net around 50%-60% of total value).

The way we're structured allows for an orderly liquidation process that would pay back investors essentially all their investment and potentially more than that.

The reason for mentioning the 30% or so cut for myself would be payment for time/involvement of liquidation, which would almost guarantee more profit to investors than hiring a outside firm.
Neo.op
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March 04, 2014, 02:21:16 PM
 #326

This is something interesting, I have some questions:
a. How do you hedge the currency risk? With rentals being denominated in USD, the actual dividend pay out will be depended upon the actual conversion rates.
b. Following from above, how do you decide on rates while paying the dividends? Will it be the actual market rates on 15th?

There's always currency risk in something like this until we start taking BTC as pay for rentals. I don't know when this will happen as everyone is paid in fiat for their jobs in my area.

We announce the dividends from the 10th-14th when we use the rates on that period for conversion.
That my friend doesn't really inspire confidence. Just because the risks exist doesn't mean there shouldn't be a mitigating factor. A hedge perhaps?

The 10th-14th date range - will the rates be market rates when the dividend is declared? Or say if 10th going rate per btc is 400 USD and increases to 500 USD or decreases to 600 USD - how will those be handled.

BTw, any stats on the rent renewals in the area? I have been reading up on the renting business and neither Blackstone's, Colony American Homes, American Homes 4 Rent  etc are not really doing well.


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Branny
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March 04, 2014, 03:11:28 PM
 #327

This is something interesting, I have some questions:
a. How do you hedge the currency risk? With rentals being denominated in USD, the actual dividend pay out will be depended upon the actual conversion rates.
b. Following from above, how do you decide on rates while paying the dividends? Will it be the actual market rates on 15th?

There's always currency risk in something like this until we start taking BTC as pay for rentals. I don't know when this will happen as everyone is paid in fiat for their jobs in my area.

We announce the dividends from the 10th-14th when we use the rates on that period for conversion.
That my friend doesn't really inspire confidence. Just because the risks exist doesn't mean there shouldn't be a mitigating factor. A hedge perhaps?

The 10th-14th date range - will the rates be market rates when the dividend is declared? Or say if 10th going rate per btc is 400 USD and increases to 500 USD or decreases to 600 USD - how will those be handled.

BTw, any stats on the rent renewals in the area? I have been reading up on the renting business and neither Blackstone's, Colony American Homes, American Homes 4 Rent  etc are not really doing well.

The lower the BTC value in USD the more investors get paid. If USD:BTC is $400 and we are distributing $800 worth of bitcoins, then investors get paid 2btc on the 15th regardless of what the price is on the 15th.

Did you look at the 34 page business plan? There should be links in there to a few rental statistic pages. Our area's gross occupancy rate is in the 97% range for rentals. Re-rents aren't a good metric because it's usually offset by vacancy allowances and rent increases. With a 30 day vacancy notice requirement on the part of the renters, it allows most landlords to rent the property out before it's un-occupied.
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March 04, 2014, 04:33:49 PM
 #328

I've been lurking on this thread for a while and decided to take the plunge on Havelock.

Is there a way I can verify myself to get access to the newsletter, google docs, et cetera?

Cheers
Branny
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March 04, 2014, 04:42:43 PM
 #329

Looked at a new house today, it could represent a very interesting proposition.

A construction company (A guy that runs it) bought a house to flip. He ran out of cash halfway through the flip, the whole property has been gutted and a huge addition has been added to the home resulting in ~2500 square feet of home. There is no plumbing, electrical or drywall.

He's got over $50k in it, told me he would take $40k. By his estimate (And I agree) it needs $30k more to finish the house.

4bed
2 bath
~2500sf
2 car detached garage
Decent part of town

He's asking $40k + $30k for rehab.

I think the property is worth $100k-$110k when it's complete and would take approximately 2 months to rehab and then 2-3 months to sell. This would result in a ROI of *about 40% in a few months. The risk of the deal is it not selling, if it doesn't sell, we could rent it out for $850-$1000/mo , which would provide ROI of about 12%. This is lower than our threshold, but not bad.

I don't have any major opinion either way on it, other than considering it, and offering $32k-$35k and not their asking price.

Branny
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March 04, 2014, 04:43:14 PM
 #330

I've been lurking on this thread for a while and decided to take the plunge on Havelock.

Is there a way I can verify myself to get access to the newsletter, google docs, et cetera?

Cheers

I now use the havelock list + old newsletter list for emails, so you'll get them on the next sends.
Fermain
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March 04, 2014, 05:10:45 PM
 #331

I've been lurking on this thread for a while and decided to take the plunge on Havelock.

Is there a way I can verify myself to get access to the newsletter, google docs, et cetera?

Cheers

I now use the havelock list + old newsletter list for emails, so you'll get them on the next sends.

Great, thanks
Chris_Sabian
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March 04, 2014, 05:25:44 PM
 #332

Looked at a new house today, it could represent a very interesting proposition.

A construction company (A guy that runs it) bought a house to flip. He ran out of cash halfway through the flip, the whole property has been gutted and a huge addition has been added to the home resulting in ~2500 square feet of home. There is no plumbing, electrical or drywall.

He's got over $50k in it, told me he would take $40k. By his estimate (And I agree) it needs $30k more to finish the house.

4bed
2 bath
~2500sf
2 car detached garage
Decent part of town

He's asking $40k + $30k for rehab.

I think the property is worth $100k-$110k when it's complete and would take approximately 2 months to rehab and then 2-3 months to sell. This would result in a ROI of *about 40% in a few months. The risk of the deal is it not selling, if it doesn't sell, we could rent it out for $850-$1000/mo , which would provide ROI of about 12%. This is lower than our threshold, but not bad.

I don't have any major opinion either way on it, other than considering it, and offering $32k-$35k and not their asking price.



Make the offer for $32k-$35k and see what happens.  It could be an easy flip.   If it doesn't sell, you can always rent it.  It sounds like a good opportunity to make an offer on
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March 04, 2014, 06:14:09 PM
 #333

I am considering to invest some more in this but I can't seem to find a liquidation clause in the documents provided.

I hope I'm not getting this right, but as it stands, if the company decides to close up shop, 70% of all the assets will go to the issuer.

Can you elaborate on this?


At the moment we don't have a clause, but we could add one that would state that say 70% of the asset proceeds go to dividend holder, or otherwise they get the bulk of the proceeds from liquidation.

why wouldn't 100% of the asset proceeds go to share holders?

If we liquidated the value say next month the value it would pay back to investors would be about 140% of current investment. To liquidate the properties it would take 3-6 months of work on my end (Or otherwise a liquidation firm is hired and paid 10%-20% of the gross capital, most of the time they only get 70% of ARV on properties, so that means investors would net around 50%-60% of total value).

The way we're structured allows for an orderly liquidation process that would pay back investors essentially all their investment and potentially more than that.

The reason for mentioning the 30% or so cut for myself would be payment for time/involvement of liquidation, which would almost guarantee more profit to investors than hiring a outside firm.

Why does this involve talking about the pre-liquidation value at all? If you are going to liquidate, you sell off the properties, paying whatever trading fees are applicable, and convert everything left to bitcoins. Then 100% of that amount should be distributed to the shareholders, right?

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Branny
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March 04, 2014, 07:03:23 PM
 #334

Looked at a new house today, it could represent a very interesting proposition.

A construction company (A guy that runs it) bought a house to flip. He ran out of cash halfway through the flip, the whole property has been gutted and a huge addition has been added to the home resulting in ~2500 square feet of home. There is no plumbing, electrical or drywall.

He's got over $50k in it, told me he would take $40k. By his estimate (And I agree) it needs $30k more to finish the house.

4bed
2 bath
~2500sf
2 car detached garage
Decent part of town

He's asking $40k + $30k for rehab.

I think the property is worth $100k-$110k when it's complete and would take approximately 2 months to rehab and then 2-3 months to sell. This would result in a ROI of *about 40% in a few months. The risk of the deal is it not selling, if it doesn't sell, we could rent it out for $850-$1000/mo , which would provide ROI of about 12%. This is lower than our threshold, but not bad.

I don't have any major opinion either way on it, other than considering it, and offering $32k-$35k and not their asking price.



Make the offer for $32k-$35k and see what happens.  It could be an easy flip.   If it doesn't sell, you can always rent it.  It sounds like a good opportunity to make an offer on


Maybe I'll do that later in the week. *Maybe* we could get some work started on it prior to doing the other property on E mill street (They're both within spitting distance).

Branny
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March 04, 2014, 07:04:19 PM
 #335

I am considering to invest some more in this but I can't seem to find a liquidation clause in the documents provided.

I hope I'm not getting this right, but as it stands, if the company decides to close up shop, 70% of all the assets will go to the issuer.

Can you elaborate on this?


At the moment we don't have a clause, but we could add one that would state that say 70% of the asset proceeds go to dividend holder, or otherwise they get the bulk of the proceeds from liquidation.

why wouldn't 100% of the asset proceeds go to share holders?

If we liquidated the value say next month the value it would pay back to investors would be about 140% of current investment. To liquidate the properties it would take 3-6 months of work on my end (Or otherwise a liquidation firm is hired and paid 10%-20% of the gross capital, most of the time they only get 70% of ARV on properties, so that means investors would net around 50%-60% of total value).

The way we're structured allows for an orderly liquidation process that would pay back investors essentially all their investment and potentially more than that.

The reason for mentioning the 30% or so cut for myself would be payment for time/involvement of liquidation, which would almost guarantee more profit to investors than hiring a outside firm.

Why does this involve talking about the pre-liquidation value at all? If you are going to liquidate, you sell off the properties, paying whatever trading fees are applicable, and convert everything left to bitcoins. Then 100% of that amount should be distributed to the shareholders, right?

Yeah, that's essentially what will happen. I need to update the business plan just reflecting what happens in the case of default/bankruptcy/ect.

Granted the plan has been to look at liquidation of some/many properties 5-6 years from now once they've appreciated a good deal.
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March 05, 2014, 12:54:41 AM
 #336

Considering adding a FAQ to the business plan so that over-time when repeat questions come in, you can just point people to the FAQ to save yourself time. 

I like the idea of flipping the house, obviously I'd check to make sure all the proper permits are in place on the work already done so you don't find out that half of it has to be torn down.  Home values are going to continue to rise (You have to put a growing population somewhere) so any time spent on work being done should grow the value as well.  I say go for it.

If it turns out to be a failure, it'll be an inexpensive failure (Over the long haul) and can provide some insight on potential unknown variables when doing something like this.

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memvola
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March 05, 2014, 08:58:08 AM
 #337

Yeah, that's essentially what will happen. I need to update the business plan just reflecting what happens in the case of default/bankruptcy/ect.

Granted the plan has been to look at liquidation of some/many properties 5-6 years from now once they've appreciated a good deal.

Can you briefly describe how the dissolution clause will look like in the contract, before the IPO is over? In essence, do you agree that the totality of net value should be distributed to the investors? Will you take a percentage cut or a management fee for the liquidation process, and will you consider distributing the profit margin and initial investment value separately? I'm personally not interested in exact numbers, but the general idea.

Sorry for emphasizing "the end", I actually think this has the potential to become a global enterprise.
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March 05, 2014, 09:05:34 AM
 #338

Yeah, that's essentially what will happen. I need to update the business plan just reflecting what happens in the case of default/bankruptcy/ect.

Granted the plan has been to look at liquidation of some/many properties 5-6 years from now once they've appreciated a good deal.

Can you briefly describe how the dissolution clause will look like in the contract, before the IPO is over? In essence, do you agree that the totality of net value should be distributed to the investors? Will you take a percentage cut or a management fee for the liquidation process, and will you consider distributing the profit margin and initial investment value separately? I'm personally not interested in exact numbers, but the general idea.

Sorry for emphasizing "the end", I actually think this has the potential to become a global enterprise.


I am considering to invest some more in this but I can't seem to find a liquidation clause in the documents provided.

I hope I'm not getting this right, but as it stands, if the company decides to close up shop, 70% of all the assets will go to the issuer.

Can you elaborate on this?


At the moment we don't have a clause, but we could add one that would state that say 70% of the asset proceeds go to dividend holder, or otherwise they get the bulk of the proceeds from liquidation.

why wouldn't 100% of the asset proceeds go to share holders?

If we liquidated the value say next month the value it would pay back to investors would be about 140% of current investment. To liquidate the properties it would take 3-6 months of work on my end (Or otherwise a liquidation firm is hired and paid 10%-20% of the gross capital, most of the time they only get 70% of ARV on properties, so that means investors would net around 50%-60% of total value).

The way we're structured allows for an orderly liquidation process that would pay back investors essentially all their investment and potentially more than that.

The reason for mentioning the 30% or so cut for myself would be payment for time/involvement of liquidation, which would almost guarantee more profit to investors than hiring a outside firm.

This was discussed on the previous page
memvola
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March 05, 2014, 09:59:46 AM
 #339

This was discussed on the previous page

Yes, I was the one asking. I am more interested in the contract clause rather than its planned effect though. I want to buy IPO shares, hence the urgency.

One last thing. What is the plan if anything unfortunate happens to Brandon?

Hope for the best, plan for the worst.
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March 05, 2014, 03:59:02 PM
 #340

This was discussed on the previous page

Yes, I was the one asking. I am more interested in the contract clause rather than its planned effect though. I want to buy IPO shares, hence the urgency.

One last thing. What is the plan if anything unfortunate happens to Brandon?

Hope for the best, plan for the worst.


I'll try and get some exact verbiage done and get it added to the contract/plan by the end of the week.

Contingency plan right now is to get our contractor/management people trained well, so if anything happens to me the operations will continue smoothly. Ben from BuyAHash.com would likely take over. He wouldn't be able to grow the company IMO like I can, but he has some real estate experience and is more than knowledgeable about cryptos.
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