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Author Topic: RentalStarter - A Midwest Real Estate Investment Company  (Read 118626 times)
jrlichtman
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March 07, 2014, 06:01:00 PM
 #361

Looks like we've sold out 100% of the IPO, so trading has now started. Looks like it's locked on havelock till 1pm today even though we sold out of our IPO.

Very excited, about the future, thanks to all the investors!

Told ya you'd sell out. Congratulations, and awesome work!
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Branny
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March 07, 2014, 06:30:53 PM
 #362

Just got a call from the listing agent on the duplex (Not duplex + SFD) saying our contract was accepted.


So, to sum things up.


Property #3 - Two homes on one lot, one of which is a duplex which results in 3 units total. Property is producing $1050/mo in income already from 2 of the 3 units. We can garner an additional $350/mo in rent, increasing this to $1400 per month. We are to take ownership on this MONDAY. Price is $67,000 with an estimated $3,000 in rehab costs. Simple ROI is 24% APY

Property #4 (Determined by contract entry date) is a freestanding house about 4 blocks away from property #2 and 6 blocks from #3. It is a free-standing house with 2 bedrooms, we will be rehabbing this and converting it to a 3 bedroom home. I expect $750 per month in income. Total purchase price is $27,500 with an estimated $10,000 in rehab expenses. Simple ROI is 24% APY . We are set to take ownership the 24th of this month.

Property #5 is the duplex we JUST entered contract on. The property has two, 3 bedroom homes and is in a pretty good location overall. I expect $1300 per month in income from this property. Purchase price of $36,500 with an estimated cost of $20,000. Simple ROI is 27.6% APY. We are set to take posession on this property the 21st of this month.



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March 07, 2014, 07:16:29 PM
 #363

Rescinded. Really enjoying the plan so far for RentalStarter though!

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March 09, 2014, 12:18:42 AM
 #364

Don't know if this has been answered before, but my main concern are the legal problems that other US-based companies who have listed BTC-based securities have had to face. I like the plan and the market, but I'm a bit worried that one day the SEC will slap down on the company for issueing unregistered securities.

We're in the process of meeting US's SEC requirements with our company which is a hong kong based LTD. We're in the final stages of PPM formation and hopefully will have something out relatively soon. A stock we work with has already received tentative approval from the SEC for their bitcoin-funded business and they are registered in the US.

Additionally, from what I can tell , investors aren't actually investing in 'rental starter'. They're really investing in the havelock's exchange, which then funds our HK corporation from those proceeds acting as a proxy for investment to our company. If we could somehow get certification for havelock's role in this, we then would meet SEC approval without issuance of a PPM.

Given that you've stated you're currently the sole possessor of the records of investment interest for several members, and that you're based in the US, are you currently registered as a transfer agent with the SEC, as required by 17A(c) of the Securities Exchange Act of 1934?  Exclusion of US investors would not satisfy compliance with this requirement, the mere fact that you personally are based in the US and maintain these records as a service imposes this obligation.  And that's just one small part of the myriad of legal problems with your investment scheme.

I understand, as of right now, it's impossible for someone of your size to have an offering and not have all of the proceeds eaten up by expenses, in reality, you probably can't even make an offering that would ever cover your expenses unless you made it only to Sophisticated Investors within the meaning of current SEC regulations.  I strongly implore you to watch the development of the regulations promulgated under Title III of the JOBS act, which allow for "crowdfunded" offerings without the investor wealth and income requirements currently imposed by US Securities law.  You would probably be able to do this priced in bitcoin, but unfortunately, your investors would have to be identified.  The truth is, nearly every country in the world (including Panama) requires investors to be positively identified by at least some counter-party to the transaction.  The current structure is likely illegal under Panamanian law, and your operation is clearly unlawful under current US law, regardless of whether you make offerings to US citizens or not.  You're free to read the Securities Act of 1933 as amended and the Securities Exchange Act of 1934 as amended and confirm that it does not have a requirement that investors must be US based in order to fall under the provisions.  All that is required is that the transaction in some way touch the US (that would be you being the ultimate beneficiary) and involve interstate or international commerce (using your internet connection from within the US satisfies both, though you'd only need one). 

Look into Title III of the JOBS act, try to make this legitimate when those regulations are finalized.  I'd hate to see you shut down and bring more bad press to bitcoin. 
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March 09, 2014, 01:44:47 AM
 #365

Best way to go about it is to create a member managed LLC.

Because registering an offering can be a prolonged and expensive process, many sponsors seek measures to avoid creation of a Security altogether. For example, a Security may not created if all investors participate unanimously in decisions involving the investment, such as in a “Member-managed LLC,” or in a Tenant in Common (TIC) ownership.
Another example of an exempt transaction is where a private lender loans money to an investor to purchase real estate using a promissory note and mortgage or deed of trust secured by the real estate. As long as investor funds have not been pooled or the note has not been fractionalized by combining investor funds to make up the total loan amount, this may qualify as an exempt transaction.

Some more reading
http://camaplan.com/articles/the-legal-aspects-of-raising-money-from-private-investors/

quicksalehelp.com
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March 09, 2014, 02:57:23 PM
 #366

Best way to go about it is to create a member managed LLC.

Because registering an offering can be a prolonged and expensive process, many sponsors seek measures to avoid creation of a Security altogether. For example, a Security may not created if all investors participate unanimously in decisions involving the investment, such as in a “Member-managed LLC,” or in a Tenant in Common (TIC) ownership.
Another example of an exempt transaction is where a private lender loans money to an investor to purchase real estate using a promissory note and mortgage or deed of trust secured by the real estate. As long as investor funds have not been pooled or the note has not been fractionalized by combining investor funds to make up the total loan amount, this may qualify as an exempt transaction.

Some more reading
http://camaplan.com/articles/the-legal-aspects-of-raising-money-from-private-investors/

Member-managed LLCs require substantial effort on the part of each member in order to ensure the Howey test for non-dependence on the efforts of others is satisfied.  Merely asking for votes here and there would not satisfy the test, see e.g. Reeves v. Ernst & Young, 494 U.S. 56 (1990) and SEC v. Edwards, 540 U.S. 389 (2004).

As for using promissory notes or other debt-based investment, these would create three problems in a situation like RentalStarter.  First, investors here are likely looking for more than simply a fixed or pegged-floating variable return on their assets, which is what you would be limited to if you wanted to ensure the investment never qualified as a security within the meaning of the 33 Act.  Second, a note would give substantial power to any investor that wanted to exit the investment early during poor performance, as they would have the ability to force either Chapter 11 reorganization or Chapter 7 liquidation on the enterprise.  Third, if not done properly, debt-based investments could qualify as securities anyway, imposing all of the same regulatory burdens as equity capital-raising efforts do.
Branny
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March 11, 2014, 02:48:54 PM
 #367

Don't know if this has been answered before, but my main concern are the legal problems that other US-based companies who have listed BTC-based securities have had to face. I like the plan and the market, but I'm a bit worried that one day the SEC will slap down on the company for issueing unregistered securities.

We're in the process of meeting US's SEC requirements with our company which is a hong kong based LTD. We're in the final stages of PPM formation and hopefully will have something out relatively soon. A stock we work with has already received tentative approval from the SEC for their bitcoin-funded business and they are registered in the US.

Additionally, from what I can tell , investors aren't actually investing in 'rental starter'. They're really investing in the havelock's exchange, which then funds our HK corporation from those proceeds acting as a proxy for investment to our company. If we could somehow get certification for havelock's role in this, we then would meet SEC approval without issuance of a PPM.

Given that you've stated you're currently the sole possessor of the records of investment interest for several members, and that you're based in the US, are you currently registered as a transfer agent with the SEC, as required by 17A(c) of the Securities Exchange Act of 1934?  Exclusion of US investors would not satisfy compliance with this requirement, the mere fact that you personally are based in the US and maintain these records as a service imposes this obligation.  And that's just one small part of the myriad of legal problems with your investment scheme.

I understand, as of right now, it's impossible for someone of your size to have an offering and not have all of the proceeds eaten up by expenses, in reality, you probably can't even make an offering that would ever cover your expenses unless you made it only to Sophisticated Investors within the meaning of current SEC regulations.  I strongly implore you to watch the development of the regulations promulgated under Title III of the JOBS act, which allow for "crowdfunded" offerings without the investor wealth and income requirements currently imposed by US Securities law.  You would probably be able to do this priced in bitcoin, but unfortunately, your investors would have to be identified.  The truth is, nearly every country in the world (including Panama) requires investors to be positively identified by at least some counter-party to the transaction.  The current structure is likely illegal under Panamanian law, and your operation is clearly unlawful under current US law, regardless of whether you make offerings to US citizens or not.  You're free to read the Securities Act of 1933 as amended and the Securities Exchange Act of 1934 as amended and confirm that it does not have a requirement that investors must be US based in order to fall under the provisions.  All that is required is that the transaction in some way touch the US (that would be you being the ultimate beneficiary) and involve interstate or international commerce (using your internet connection from within the US satisfies both, though you'd only need one). 

Look into Title III of the JOBS act, try to make this legitimate when those regulations are finalized.  I'd hate to see you shut down and bring more bad press to bitcoin. 

Thanks for comment, i am not a lawyer, but have forwarded it to mine and will revert as necessary
Branny
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March 11, 2014, 07:17:00 PM
 #368

Finally sat down and met with the accountant today to work on moving us to having monthly audited financial reports prepared by a 3rd party. I do believe they will start reporting by the end of April.

The hope here is to move towards a GAAP standard for the accounting of our business. This will help us should we ever decide to move forward with something like a reverse merger with a company already listed on a public stock exchange. At any rate though, it's a good idea to add another layer of transparency to the company.
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March 11, 2014, 08:25:42 PM
 #369

Hi Branny,

Can you give a dividend forecast or put up a page on the fund's website where investors can see that.

lemfuture
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March 11, 2014, 09:05:25 PM
 #370

Finally sat down and met with the accountant today to work on moving us to having monthly audited financial reports prepared by a 3rd party. I do believe they will start reporting by the end of April.

The hope here is to move towards a GAAP standard for the accounting of our business. This will help us should we ever decide to move forward with something like a reverse merger with a company already listed on a public stock exchange. At any rate though, it's a good idea to add another layer of transparency to the company.
does this mean were gonna get taxed at every dividend?

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Branny
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March 12, 2014, 01:48:54 AM
 #371

Finally sat down and met with the accountant today to work on moving us to having monthly audited financial reports prepared by a 3rd party. I do believe they will start reporting by the end of April.

The hope here is to move towards a GAAP standard for the accounting of our business. This will help us should we ever decide to move forward with something like a reverse merger with a company already listed on a public stock exchange. At any rate though, it's a good idea to add another layer of transparency to the company.
does this mean were gonna get taxed at every dividend?

Tax is going to be paid out of the issuer's cut for the foreseeable future.

Hi Branny,

Can you give a dividend forecast or put up a page on the fund's website where investors can see that.

Would it be better on rentalstarter's site, or on the havelock page?


Also, we closed on our 3rd property today, the seller's transferred the remaining 20 days of rent to us along with deposits. Still close on two more properties this month, demo is set to start on this studio unit tomorrow.
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March 12, 2014, 03:35:24 AM
 #372

on havelock pls, so we'll get email updates
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March 12, 2014, 06:56:43 AM
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Also, we closed on our 3rd property today, the seller's transferred the remaining 20 days of rent to us along with deposits. Still close on two more properties this month, demo is set to start on this studio unit tomorrow.

Great going.

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March 12, 2014, 08:14:30 AM
 #374

tax uh oh there goes the profit  Roll Eyes

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Branny
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March 12, 2014, 03:37:23 PM
 #375

tax uh oh there goes the profit  Roll Eyes


For the time being the issuer will adsorb all taxes outside of those on the property (Income/state/federal) taxes. We've met with tax attorneys, accountants and others to help guide us, and it's going to be a while before we have to start paying taxes due to the massive amounts of depreciation and other costs we have doing this kind of business.
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March 12, 2014, 06:14:17 PM
 #376

Dividend notice was posted on Havelock, set for the 15th.

Total to be paid to investors is $1,128.75/1.75btc among all shares.

Slightly higher than last month's dividend due to the partial rent assignment for property #3, I did take a small disbursement of funds from this time. Total income over the period was $2,577 in gross income. Gross income less insurance, taxes, repair escrows came out to $1,777, of which I took $500 as the issuer.

If you have any questions, let me know.
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March 17, 2014, 01:48:59 AM
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Quick update.

The SFD on property #3 is almost done, ended up being way more work than originally estimated. We took off some of the wood paneling inside the house to replace and found the home had virtually no insulation. Rather than just hiding the problem I made the choice to rip out the walls, insulate and put new drywall in. Original estimate was $3k in rehab, we may go an extra $500 to $1,000 over that price.

The bank has asked if we'd like to move up closing on #4 by a few days, this would be preferable as I want to keep our rehab crew busy. Menards has their bid 11% off sale, of which we can also get some extra discounts. It will help #4 and #5's rehab costs a good bit.

A person I sold a house to last year messaged me today and asked if we wanted to take it over for what they owed. It's a nice house in a good area, 2-3br , 1ba 1400sf with $650/mo in income. They asked if we'd take it for $40k, and I told them yes. Waiting on any further response/messages from them.
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March 17, 2014, 07:57:18 AM
 #378

thanks for updating the board members  Grin

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March 17, 2014, 01:24:12 PM
 #379

Quick update.

The SFD on property #3 is almost done, ended up being way more work than originally estimated. We took off some of the wood paneling inside the house to replace and found the home had virtually no insulation. Rather than just hiding the problem I made the choice to rip out the walls, insulate and put new drywall in. Original estimate was $3k in rehab, we may go an extra $500 to $1,000 over that price.

The bank has asked if we'd like to move up closing on #4 by a few days, this would be preferable as I want to keep our rehab crew busy. Menards has their bid 11% off sale, of which we can also get some extra discounts. It will help #4 and #5's rehab costs a good bit.

A person I sold a house to last year messaged me today and asked if we wanted to take it over for what they owed. It's a nice house in a good area, 2-3br , 1ba 1400sf with $650/mo in income. They asked if we'd take it for $40k, and I told them yes. Waiting on any further response/messages from them.

That is awesome, can not beat free equity!

quicksalehelp.com
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March 18, 2014, 06:02:40 PM
 #380

Just sent out a very long investor-only email to our newsletter list. If you're a investor and did not get it, please message me on here and i'll try to take care of it.

In the email I included instructions on how to access our property portfolio list. Once again, this is for investors only.

There are also 3 potential future properties to review contained in the email.

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