Would You Promote This Product?

[crons79]

You all are real downers; letting facts get in the way of this guys fantas...I mean dream.

I actually like the constructive, positive advice.

"Actually, in retrospect; what your describing is more like a Bond than a REIT. Almost a combination of the two... in a way..."

Initially I was thinking about a Bond offering. Now I have to research the appropriate investment instrument. (Bond, REIT, Note, or CMO)

"If it were really true, you would be overwhelmed with investors. Some of you might remember in late 2008 when one of the annuity companies offer a one year guaranteed rate of 6% and a bailout option free from penalty if the renewal rate dropped below 5. They were swamped with apps, one of my apps took 4 months to get issued."

It is still really early in development so I have not promoted this in any way, but when it gets to that point I hope we are slammed with applications like you mentioned. The company in Florida raised a couple million with their bond offering using almost 200 agents. I would like to do the same thing eventually.

 

[Crabcake Johnny]

In all honesty, if you have an idea worth pursuing then go for it, regardless of the feedback you get from a forum.

In fact, be careful not to post too many details or your idea will be stolen.

 

[bluemarlin08]

Sweet deals get gobbled up quick. In the boom days of RE in the 80's, our office could move a 20 million deal in 15 minutes, alot.

 

[scagnt83]

Unless you are holding/profiting off of the mortgages, this is not a CMO.


This is like a private corporate bond in the fact that you are placing a fixed price on the underlying contract. And the contract is guaranteed by the issuing Corporation and secured by the Corporations assets (or specific assets within the corp)

So really, yeah, what you are talking about is more of a Bond than a REIT.

Basically all a Bond is, is debt.
It is issued by an entity to raise capital for business operations.
It obligates the issuer to pay a certain rate on the amount invested.
In the event of default, the investor is entitled to the securing assets.


A REIT by law has to distribute 90% (i think its 90%) of its profits to shareholders (ie: investors). So unless you have a totally fixed revenue source, paying a fixed rate to shareholders will not work for a REIT.
You could do a minimum payout rate to shareholders probably, but not a fixed one.
It would not allow your business model to work.



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Where you will gain broker interest is by telling people what the underlying assets are. That will make all the difference. You dont have to say specific properties; but describe the real estate that you are investing in to brokers. What is the underlying business model to profit off of the real estate?

You will be required to disclose this and more to investors anyway. And any broker worth their salt will want to know the details before he ever touches the offering.

If you have long term leases with existing tenants (im assuming your using a recurring income generating model), and those tenants are corporate tenants with the pockets deep enough to satisfy the lease. And you actually own the property.
Then you might have something that could get maybe a B rating from one of the agencies.
Anything less, and you will be rated a C or worse (not considered a safe investment by financial professionals)



Hypothetically, if you wanted to put this on an annuity chassis; you might be able to do a FA if you where to establish an insurance company.
I dont think that there is anything that says that a company cant have all its investments in RE..... (im not an expert though, im sure someone will come along and correct that if im wrong)

 

[VolAgent]

Hypothetically, if you wanted to put this on an annuity chassis; you might be able to do a FA if you where to establish an insurance company.
I dont think that there is anything that says that a company cant have all its investments in RE..... (im not an expert though, im sure someone will come along and correct that if im wrong)

Now if he could throw it in an annuity wrapper and still spit out 7%, I'd be interested in learning more. The annuity wrapper would let him guarantee the return, although not sure if he'd still be able to stay at 7%.

 

[scagnt83]

Now if he could throw it in an annuity wrapper and still spit out 7%, I'd be interested in learning more. The annuity wrapper would let him guarantee the return, although not sure if he'd still be able to stay at 7%.

It will never happen at 7%, the overhead is too high.
Plus, the financial rating his company would receive would still be affected by the underlying assets (which he seems to not want to discuss); would you put a client in an annuity from a C or D rated company?? Would your E&O even cover that??

With only one asset type in his portfolio, he would not receive a favorable rating from the agencies.
A bond offering would have a better chance for a higher rating.

 

[VolAgent]

It will never happen at 7%, the overhead is too high.
Plus, the financial rating his company would receive would still be affected by the underlying assets (which he seems to not want to discuss); would you put a client in an annuity from a C or D rated company?? Would your E&O even cover that??

With only one asset type in his portfolio, he would not receive a favorable rating from the agencies.
A bond offering would have a better chance for a higher rating.

I never said it would happen, and I never said I would like the details.

I said I would be interested in learning more. Details like this would keep me from pursuing the offering.

 

[padthaiforlunch]

Grunch:

Seems to me the only way he could guarantee 7% is if he were paying delinquent property tax with the right to take possession if it isn't repaid with interest within a certain number of years.

Crons, my gut reaction was no. The RE market is sooo effed up with tons of foreclosure overhand in residential and business markets.

 

[padthaiforlunch]

And you need to share this with us because....?

Bookmark.

Danny
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crons79,

I'm bookmarking threads I want to return to. If you have a complaint, send it to the mods.

Danny

 

[HarryRenard]

Crons79- A few months ago you started a thread for a 6k-10k loan and were shocked that no one would loan you the money. I would put this thread in the same ridiculous category.

You pick a few crazy highlights filled with "promises" not backed by any substance and want serious feedback on this investment that my friend is crazy.

Why dont you take this thread to craigslist and I am sure they will blow plenty of smoke up your ass, that is what your looking for isnt it.

Stop trying to get rich quick, it aint gonna happen.