Posted by Merle on October 31, 2000 at 18:34:23:
You are absolutely correct!
Merle
More about private investors … - Posted by Merle
Posted by Merle on October 29, 2000 at 06:21:54:
One asked about advertising the local “free” senior pubs. None of the papers in our area are free, unless you are talking about the circulation. Our most successful ads have appeared in our local shopper. It is mailed to every home in the area.
Your ad might say something like, “Earn 9% interest, paid monthly. 5 year note. $50,000. Secured. Details, call John Doe, 999-9999.”
Our paper sells a block of 16-word ads at a reduced price, so we always try to keep within that size.
Another asked about our investors participating in other areas of the country. I can easily answer that for them … they would all say, “No.”
Again, let me paint a picture for you. These are not sophisticated investors. They are folks (and I use that word purposely) like your mother or dad and mine. They have worked hard all their lives. Saved some money for retirement. They saved it in CD’s, savings accounts, etc. Some even in US Savings Bonds. Some of the worst returns you can imagine. BUT, THEY CONSIDER THEM TO BE SAFE!!!
If you want to tap into that money, show them the same safety. These folks are stupid … naive perhaps … but not stupid. Confuse them and they will say “NO!” Make your offer sound, sensible, and perfectly safe … they will listen. No fast talking scam or con deal … won’t work.
Our investors “bought” us. They don’t know you in another part of the country. They might take my word for it … but, even I don’t know you well enough to recommend you. And, we certainly don’t want to end up with a property in California or New York. We buy only wihin a 30-minute drive from our home.
That’s all for now … gotta get ready for church,
Merle
How much of a return… - Posted by IB (NJ)
Posted by IB (NJ) on October 29, 2000 at 20:48:39:
do you offer your private investors Merle? I’v always had that question after I read your posts. Hope that isn’t too personal? If it is, could you email me the details 
Thanks
Re: More about private investors … - Posted by Laure
Posted by Laure on October 29, 2000 at 18:25:49:
I understand that it is illegal to advertise this way unless you have a securities license. You may TELL everyone in the world. Your doctor, your dentist, their friends, but if you do an ad like this, you’re asking for trouble. I believe, you can even hold seminars for your “pitch”, but advertise it? Nope.
Laure
Oh no! I made a serious typo! - Posted by Merle
Posted by Merle on October 29, 2000 at 14:27:14:
Please, please, read the whole sentence above. I mistakenly omitted a word. In the 6th paragraph, it should read “these folks are NOT stupid … naive perhaps … but not stupid.”
Thanks to Paul for bringing that to my attention. Should not proofread anything I type in a hurry.
My sincere apologies to any seniors who read that as an insult. Can’t believe I did that.
These investors made our business possible. I have nothing but the greatest of respect for each of them. Many of them are now our friends. They are definitely NOT stupid.
Merle
What if there is a huge windfall? - Posted by Ben (NJ)
Posted by Ben (NJ) on October 29, 2000 at 07:30:00:
If you experienced a big windfall from the sale of a property through appreciation or any other reason, is your investor entitled to any of this upside or just
the straight interest payments? Thanks for your generosity and promptness in answering these questions.
Re: How much of a return… - Posted by Merle
Posted by Merle on October 30, 2000 at 07:29:00:
No, that is not too personal. Thought I had written that in a previous post.
We pay them 9% interest. Paid in monthly payments. Note balloons in 5 years. And, as I’ve said before, most of them (in fact, almost all of them) reinvest the money at that time.
Merle
Re: More about private investors … - Posted by Merle
Posted by Merle on October 29, 2000 at 19:22:54:
I certainly have no intention of arguing the point, but, I do wonder … you say, “it is my understanding.” From what source of information did you arrive at this understanding? If the source is reliable and one who knows the true facts, I would like to also have an opportunity to reach that understanding.
We have been thru this business over and over for 16 years … spent $1,000’s on attorney fees and research. It is our understanding after all this that you can advertise a specific note.
Your concerns, however, are the very reason I always suggest that someone contact their own legal counsel before doing anything with investors.
One final point. I am basing my comments on years of experience and many dollars spent for legal advice. Too often people express comments or thoughts based on hearsay evidence. Their intentions are as honorable as anyone could expect and they would never intentionally mislead another person. It’s just that someone else misinformed them. This type of information can be very damaging to others.
Laure, please let me know if you have some info I need to know about this issue. I truly would like to know it … for my own benefit.
Thanks,
Merle
Re: What if there is a huge windfall? - Posted by Merle
Posted by Merle on October 29, 2000 at 14:29:38:
They are lenders only … no participation in the profit or loss. In fact, that might even change the entire relationship between us … you would have to check with your attorney. We pay them interest only.
Merle
assigning risk (and profits) - Posted by RR Smith
Posted by RR Smith on October 29, 2000 at 11:37:51:
Investors are inherent risk takers they support projects that most people avoid. Commodities futures traders take the risk out of being a farmer (maybe still the biggest gamblers in the world). Read Peter Bernstein?s book on risk! Usually hard money investors are “bondholders” they are in for a set amount of risk and a limited portion of the returns. In return for being sheltered from the majority of the risk bondholders get a safe (low) guart. return.
Re: More about private investors … - Posted by Laure
Posted by Laure on October 29, 2000 at 21:21:26:
Actually, it was said on a tape series I listened to. Unfortunately, the “man” was a guest on the tape series. I’ll have to dig in my den and see if I can come up with his name. He spoke as an investor who only uses private money and solicits investors privately. I’ll get back with you if I find more info.
Laure
Re: assigning risk (and profits) - Posted by Merle
Posted by Merle on October 29, 2000 at 14:32:55:
Not sure how your comments relate to our situation. Our loans are set up to virtually eliminate all risk for our investors. I hesitate to use the term “hard money” as these folks are not your typical “hard money” investors. They are not expecting any loss whatsoever. In fact, they do not believe they can lose anything with us.
Merle
Re: More about private investors … - Posted by Merle
Posted by Merle on October 30, 2000 at 07:36:09:
One thing I learned the hard way many years ago. Never quote facts or statistics unless you know for sure their truth. Many problems in the world today began with some bit of false information … and, in many cases, passed on by a sincere unsuspecting person.
In fact, take a look at the current political campaigns. Many Americans will this very day quote and even argue about things they believe to be true but that are, in fact, totally false.
Let me know when you find that. I am always interested in every idea about our business … whether they agree or not. Aids in the learning process.
Merle
Risk free RE investing?? - Posted by RR Smith
Posted by RR Smith on October 29, 2000 at 17:46:41:
or even risk free investing. The words risk free and investing do not belong in the same sentence. These folks ARE your typical “hard money” investors. They are not expecting any loss whatsoever. In fact, they do not believe they can lose anything with us.
Re: More about private investors … - Posted by Laure
Posted by Laure on October 30, 2000 at 19:34:08:
I requested a copy of the Securities and Exchange Commission’s law from my broker. He’s faxing it to me in the morning. I’ll copy and paste it up on the board.
Laure
Re: More about private investors … - Posted by Merle
Posted by Merle on October 30, 2000 at 20:53:48:
Hi Laure …
As stated below, that would be a very long post. What would actually be better would be the interpretation of those laws by an attorney specializing in securities law. Especially helpful woud be his/her thoughts on our specific situation concerning the loans secured by residential properties that we obtain from individuals. There are so many facets to the securities laws. Our attorney said it was like a giant spider web. Every time you look at one area of the law, you find that you have to connect that issue with many others. And, each of the others have ongoing connections as well.
Rather than posting the securities laws, you might post the web sites for the securities commission in each state. That way, everyone can read the laws for their own state.
Thanks for all your help, Laure …
Merle
Re: More about private investors … - Posted by JohnBoy
Posted by JohnBoy on October 30, 2000 at 19:53:27:
That will be one heck of a long post!
Re: More about private investors … - Posted by Laure
Posted by Laure on October 31, 2000 at 09:13:09:
I sent a request of information to the SEC. Posted your sample ad, and asked them if this is ok. That’s pretty simple way to get an answer !
Laure
Re: More about private investors … - Posted by Merle
Posted by Merle on October 31, 2000 at 18:31:07:
If only it were that simple!
Quite likely, one of three things will happen. One, you hear nothing (most likely). Two, someone responds suggesting you contact an attorney. Three, they respond with a “no.”
I would be greatly surprised if they said yes. It would be rather dumb on their part. For the very reason that JohnBoy mentions. You would keep their response so if you got into any trouble, you could show proof that someone said it was OK. They won’t take that kind of risk … even if they know the whole plan.
In fact, you will even have great difficulty getting an attorney to give you an opinion … unless the attorney is licensed in securities law. The Errors and Omissions insurance is very expensive for covering securities problems and most attorneys simply do not carry the coverage. So, rather than even a weak maybe, they will tell you no. If they say no, you can’t blame them if you get into trouble.
That same thing applies with the SEC. If they say no, they don’t have to worry about any possible problems with you. They feel thay have enough to deal with, why open the door for more?
Sending a sample ad will almost assuredly get a NO!
I appreciate your enthusiasm and creative thinking … it takes both of those to be successful in this business. Keep it up.
Since we have spent many thousands of dollars for high-priced securities attorneys ($450 per hour), I will be interested in any good info you get. Keep me posted, please.
Merle
Re: More about private investors … - Posted by JohnBoy
Posted by JohnBoy on October 31, 2000 at 15:10:03:
The problem is if this would be the same as dealing with FHA and VA, you know, ask 20 people working their the the same question and get 20 different answers.
Since this law is so complex, my guess would be to ask a lawyer well versed in securities law to get the right answer.
If they do respond to you and say it is ok, I’d hang on to that response from them to show documented proof that they gave you the ok on this. If they tell you it’s not ok, then I would still want to hear this coming from a securities law attorney to confirm it.