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Author Topic: RentalStarter - A Midwest Real Estate Investment Company  (Read 119459 times)
thehun
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May 19, 2014, 01:34:41 AM
 #501

I am just wondering what Branny and the other investors feel the price of btc rising quickly again would have on the price of this security? I feel like since all these houses are measured in USD, if we were to have another large bitcoin bubble then the value of these shares would drop substantially in price. This is currently stopping me from investing anything more then a very small amount (an amount that I normally would have kept in fiat). Do we also hold a large balance in btc? Does the company take it's rent proceeds and keep them in btc as to gain from an appreciating price, allowing us to purchase more housing?
Also wondering how would this security continue to operate if the price of btc was to hit $0? Would it start paying out dividends in another coin? Would it collapse?

There are just a lot of difficult to measure variables when buying into a fiat security using your btc.


As we have discussed several times before, in this venture BTC is an investment vehicle, not an investment in itself. If you believe there will be another BTC rally, your best bet would be to just buy and hodl as many BTCs as you can. If BTC value goes up, the logical thing to happen is a decrease in the value of the shares (in BTC terms, not USD), and the opposite if it goes up. If BTC collapses (disappears), we still have the company assets and we would have to find a new way of distributing profits.  

As we are investing in real estate here (not speculating in cryptocurrencies) we should hope Branny keeps most of the reserves in USD, not in BTC.

Given this I am very surprised that the price has not stayed up at .75. Makes me think I should grab more haha.

I'm also buying more shares while the price is low. I guess it'll stay like this until all properties are rented and people start realizing the long-term potential (which is unusual in the short-term oriented BTC world).

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Branny
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May 19, 2014, 08:01:41 PM
 #502

I am just wondering what Branny and the other investors feel the price of btc rising quickly again would have on the price of this security? I feel like since all these houses are measured in USD, if we were to have another large bitcoin bubble then the value of these shares would drop substantially in price. This is currently stopping me from investing anything more then a very small amount (an amount that I normally would have kept in fiat). Do we also hold a large balance in btc? Does the company take it's rent proceeds and keep them in btc as to gain from an appreciating price, allowing us to purchase more housing?
Also wondering how would this security continue to operate if the price of btc was to hit $0? Would it start paying out dividends in another coin? Would it collapse?

There are just a lot of difficult to measure variables when buying into a fiat security using your btc.


If you were certain that BTC was going to take a huge increase in price, there's no sense in investing in virtually ANY stock that has to do with bitcoin, it'd be far better just to hold your coins.

Our purpose is to build/grow a business that's denominated in USD and to provide good returns on it and hopefully outpace the rise in BTC's price through leverage. If BTC goes down to $0 Then we'll figure out some other way to pay. However I don't imagine that we'll ever see it go down to $0 (Even from day #1 it wasn't $0, it had SOME value, although quite small).


The stock price doesn't really revolve on fundamentals, more than anything it just depends on how many updates I put out. The more the updates, the higher the stock price, the fewer the updates the lower the stock price seems to go. The fundamentals just keep getting better which *should* increase share price, which isn't exactly what we're seeing with pricing on HL.

As for share transfer - We've sent out a half dozen or emails concerning share migration. As Havelock said, email them and they should be able to assist.

As for BTC/USD reserves - We take a 'draw' from our HL wallet when we buy new properties/rehab them. It would have been far better to keep EVERYTHING in USD in the bank, but unfortunately we have quite a few investors that believe that USD per BTC will increase greatly so they do want us to keep some in our BTC wallets. As it stands now there's something like $555,000+ between our USD & House equity accounts and a little over 100btc in our wallets.
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May 21, 2014, 06:13:41 PM
 #503

Lots of good progress on Walnut this week, finishing up painting on 5 of the 7 rooms that needed painted. Once we get all the painting done then we'll move on to exterior painting/concrete work, interior flooring (Replacing carpet in a few rooms), plumbing (Upgrading to CPVC), ridge caps and some other minor work. Have several good tenants already in line for the property.


Also leaning towards holding off on another purchase till I can find a suitable flip. I've located 5-6 properties that have been flipped (All were on our radar, however were being sold during periods where we couldn't proof funds) and they provided the investor a median profit of $40,000 on a $50,000 investment with a rehab & market period of less than 4 months.
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May 26, 2014, 01:25:17 PM
 #504

Will get update photos mid week of Mill & walnut. Tons of progress to both, they're setting up the kitchen cabinets the first part of the week.

Walnut is mostly repainted, next things to do will be the plumbing and the little bit of roof work then we'll be ready. TONS of applications and requests on both properties, both likely will be rented out before they're ever done.
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May 28, 2014, 07:39:56 AM
 #505

thanks for the updates, really apprecciated
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June 02, 2014, 10:08:10 PM
 #506

Few quick updates.


W. Mill - There have been some somewhat major issues with the heating/cooling and plumbing. Tenants are weeding out the issues, all due to it being a 134 year old home, there was a sewage backup and our guys got sprayed with.....stuff. Cost us a few hundred bucks to fix all the problems. Nothing hugely major, our monthly repair escrows covered all the expenses as estimated. Only additional expense has been buying a 30lb tank of freon. It's pretty expensive stuff, but one tank will last us about 8 complete AC recharges, if we were to get someone else, a recharge would run $100-$150 per unit, the tank is costing us $300.

Logan - Nothing to report, tenants are happy and paid up.

Scioto #1 - Tenant moved out of the $350/mo unit, i'm quite glad they did. Problems were arising with the long-term tenants that were there. We returned a small portion of the deposit back to them, hopefully will have it rented out before next div date.

Scioto #2 - A fun story on this one - The last landlord was still collecting checks from the government. We were *supposed* to be getting them (As noted in an email last month) but we never got them. I ended up meeting with the Chilli metro housing authority on it and they forced him to give back what he took. Today I deposited last months & this month's rent from Hud/Sec8/CMHA. I also found out that the rent rate is HALF of what CMHA will allow on it, so when the lease is up (next year) We should be able to increase the rate dramatically on this rental (Currently 625/unit average, if we went to 100% of CMHA rates we'd be bringing in around 900/unit).

E. Mill - Finally tons of progress, hopefully will have photos up in the near future of what all has been done. They're FINALLY setting up the new kitchen. I'm pretty excited about it because *I designed it*. All oak cabinets, tile backsplash, looks fantastic from the layouts I'm seeing.

Mulberry - Nothing much to report outside of waiting for work.

Walnut - Lots of progress, you'd be shocked at how fast we're going through things. Plumbing is almost done, just left with a clogged toilet drain. Painting is all done for the most part, drywall work is done. What's left now is carpet , exterior painting then we'll be ready for tenants. I already have 3 highly qualified tenants in line dying to rent it out. We NEED more 4br.
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June 02, 2014, 10:27:24 PM
 #507

With the rise in BTC have you started looking at other properties, or are you holding off until all current units are fixed up and/or rented out?

If you feel like donating: 1NtgJf4znCsA5GJDCbqtowHL2143WyqLkC
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June 02, 2014, 11:06:53 PM
 #508

Few quick updates.

W. Mill - There have been some somewhat major issues with the heating/cooling and plumbing. Tenants are weeding out the issues, all due to it being a 134 year old home, there was a sewage backup and our guys got sprayed with.....stuff. Cost us a few hundred bucks to fix all the problems.

I just imagined that it sounded really unpleasant to say the least.
Thanks for always keeping us up to date and keep up the good work
(And bring goggles and a facemask for stuff...)
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June 03, 2014, 01:56:35 AM
 #509

Few quick updates.

W. Mill - There have been some somewhat major issues with the heating/cooling and plumbing. Tenants are weeding out the issues, all due to it being a 134 year old home, there was a sewage backup and our guys got sprayed with.....stuff. Cost us a few hundred bucks to fix all the problems.

I just imagined that it sounded really unpleasant to say the least.
Thanks for always keeping us up to date and keep up the good work
(And bring goggles and a facemask for stuff...)

I haven't cashed any BTC out recently, we still have ~130btc in reserve unassigned to any properties (Although I likely will need to take 10btc more out to cover the final repairs of Walnut & Mulberry as they weren't in the original scope of work, and due to the drop from 600>450 earlier that also wasn't included.

My hope right now is to flip a property in the next 3 months. That would provide a large dividend to investors along with good cashflow to the business.
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June 03, 2014, 01:04:31 PM
 #510


If you were certain that BTC was going to take a huge increase in price, there's no sense in investing in virtually ANY stock that has to do with bitcoin, it'd be far better just to hold your coins.

As for BTC/USD reserves - We take a 'draw' from our HL wallet when we buy new properties/rehab them. It would have been far better to keep EVERYTHING in USD in the bank, but unfortunately we have quite a few investors that believe that USD per BTC will increase greatly so they do want us to keep some in our BTC wallets. As it stands now there's something like $555,000+ between our USD & House equity accounts and a little over 100btc in our wallets.

You need to hedge the position with futures.
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June 04, 2014, 03:43:53 PM
 #511

Just located a monster deal.


2br (Can be increased to 3br), 1ba. All mechanicals are newer, updated furnace, AC (central), electrical. Kitchen is in good shape but a bit out of date. Property is ready to go.

$700/mo in income (expected).

They're asking $27k, I think I can get it for $20k-$23k. Simple ROI of 45%!
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June 04, 2014, 08:23:50 PM
 #512

Good job Branny go on with the project, and keep us update, as you do, regulary in the good way you usual do...  Smiley

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June 04, 2014, 08:50:12 PM
 #513

What are your plans if this happens:  http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370541972520
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June 04, 2014, 09:24:26 PM
 #514

Branny is an operative of the Hong Kong holding company.  He isn't the one you bought shares from or whatever.  It's a different thing.  The company in Hong Kong is allowed to offer shares in their country this way. 

Note, that the SEC understands this as the company that is dealing directly with the payouts.  If Branny sends income to the Hong Kong holding company and they distribute to the share holders, then he is just their operative and this works fine.  If, however, Branny is the one distributing payouts than regardless of the Hong Kong company ownership he would fall into the legal quagmire that Ken found himself in with his company being registered in Belize.

They follow the money.  Where the money is being distributed is where the investment lives. 

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June 04, 2014, 10:06:24 PM
 #515

Branny is an operative of the Hong Kong holding company.  He isn't the one you bought shares from or whatever.  It's a different thing.  The company in Hong Kong is allowed to offer shares in their country this way.  

Note, that the SEC understands this as the company that is dealing directly with the payouts.  If Branny sends income to the Hong Kong holding company and they distribute to the share holders, then he is just their operative and this works fine.  If, however, Branny is the one distributing payouts than regardless of the Hong Kong company ownership he would fall into the legal quagmire that Ken found himself in with his company being registered in Belize.

They follow the money.  Where the money is being distributed is where the investment lives.  

What an unusual and creative defense!  You've found the dreaded loophole the feds haven't considered, and now they's totally stumped.  Boy howdy!

Assuming that what you propose is actually true, Branny is a US citizen operating from the US soil, facilitating the sale of unregistered securities (through an unlicensed Panamanian exchange) to US persons.  So yeah, the SEC has both jurisdiction and ready access to Branny.  
Being an agent of the mysterious Hong Cong company is neither here nor there.  10/10 will pwn.

Nothing against Branny or what he's doing here, but you should restrict your amateur lawyering to your own back yard.
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June 04, 2014, 10:47:17 PM
 #516

This is how I understand it.

Branny isn't facilitating the sale of unregistered securities in the United States.  The Hong Kong company is operating that.  They exist and are real.  It's not a front face with no office.  There is a real Hong Kong company that is selling the shares and distributing the profits.  Branny is not involved in the shares at all.  Other than likely being a shareholder himself.

So what would Branny get arrested for?  Buying properties that are owned by a Hong Kong company?  It's legal in Hong Kong for the company to sell shares.  So what exactly ?

You have to connect the dots that Branny is the one selling the shares.  He isn't. 

How much of a cut is this Hong Kong company taking for this honour?
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June 04, 2014, 10:49:47 PM
 #517

@tempestb:  Why did you delete your post?

Edit: Anyhow, not going to debate law on the interweb, but your scheme has all the sophistication of Ken Slaughter's
"Active Mining Corporation (AMC) is a Belize International Business Company DBA Active Mining Cooperative and is a wholly owned subsidiary of Virtual Mining Corporation (VMC) a Delaware Corporation." and
"AMC is a virtual identity totally owned by the Active Mining Corporation (Belize) that represents both itself and its profits."

Just stop.  Wordplay and offshore shells are like catnip/chew toy to to baby feds--they get to cut their teeth on hapless amateurs before graduating to real bznz. 

And as I said, I have no problem with what Branny is doing, hope everything works out for everyone.
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June 04, 2014, 10:51:29 PM
 #518

I'm not certain of my understanding of it.  I figured I'd just let Branny talk about it.  I believe what I said is true, but it may not be correct.  Better to let him answer your questions...

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June 05, 2014, 04:00:33 AM
 #519

I'm still waiting on a official release from our lawyer on how it's structured, but until that time I can't give the outlay of how it works.

Our attorney works for multiple large funds who operate in both the US and Hong Kong. We have several layers of security and legal protections in place to deal with any SEC related issues.

Concerning vorhees - there's quite a bit of stuff going on behind the scenes that people can't talk about. The lawyer we have on retainer has offered some guidance to me about what's going on and it was confirmed by additional legal council.

Concerning the management fee the HK entity takes - That number is paid by my cut of the company equity. RENT pays for typical upkeep costs (Around $150 a year for secretary, mailing address and minor accounting bookkeeping). I am not a managing director of Full Power Asia Investment LTD, David Cho Sin Ong is, I also am not a shareholder in any capacity of the entity.

Additionally, JOBS act is on the horizon, we are nearly completely compliant from those I've talked to who have some idea on forthcoming rules. The ace up our sleeve is the fact that we do retain an accounting firm and a good attorney who are making sure that we're doing our best to be legally compliant in the countries we operate from.
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June 05, 2014, 05:17:28 PM
 #520

I have been talking to our corporate attorney concerning the SEC risks, now that VMC & Eric Vorhees have been charged with unregistered securities.

So, at this point I feel that it is in the best interest of RentalStarter that we register our PPM with the SEC for a 506c exemption in order to be more compliant with the regulatory bodies here in the US. After we finalize this, we can talk more about how the company structure works to avoid any additional conflicts and problems.

The costs will be quite minimal for the SEC filings in the grand scheme of things, my brother has already done it for his company (BuyAHash) and found it to be quite painless. This will also benefit the company in the fact that we then can approach large accredited US investors to fund us further.
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