The 3 Types Of Real Estate Investors And What Sec Rules They Need To Follow

Three Groups of Real Estate Investors

Three Groups of Real Estate Investors

When it comes to complying with the SEC regulations, I see three groups of real estate investors...

Group #1: You don't have any private lenders but are ready to jump in the water and start bringing them on board.

STOP!!

Listen, this is the time you need to do the following:

1) Create your disclosure document to be handed out to lenders

2) You need to understand your states SEC compliance threshold

3) Find an SEC attorney and let him in on what you are doing.

4) Make a decision:

a) I am going to work with family, friends and associates and stay under the state threshold so I don't need to file.

b) I am going to advertise, pool and/or work with strangers o I need to file with my states SEC office before I approach my first private lender. So I have a registered security.

c) I'm going to cross state lines and I'll need to go for the federal filing too.

d) I am in one of the 10 states that require me to notify the state SEC office before I get my 1st private lender. So file now.

5) Get your disclaimer statement completed too.

Group #2: You have a few private lenders but are under the states threshold. You need to do all of the above plus there is a form to look back and let the SEC office know what you have been doing.

Group #3: You are over the threshold and have made a mess. Hire an SEC Attorney and let them guide you through the jungle. You won't like it but I believe it is better to put all your cards on the table face up and take your spanking rather than wait and hope you don't get in trouble.

The bottom-line...

Look, your dancing with a gorilla. Why take a chance. There are rules on how to play the game. The SEC controls the rule book and they are there to protect the consumer, not you.

The flat easiest way to be in compliance is to do it before you secure your first private lender. So do yourself a favor and start your business off on the right foot.

I find so many real estate investors are scared of the SEC. If they would only follow the rules from day 1, it would make life a lot easier and safer for all.

by: Alan Cowgill

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