Archive for February, 2013

Feb
27

NAREIA Winter Cruise

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by Wendy Ceccherelli

The Real Estate Association of Puget Sound (REAPS) is a chapter member of the National Real Estate Investors Association (NAREIA). As such, REAPS members are invited to take advantage of various NAREIA-sponsored benefits, such as discounts at Home Depot and Sherwin Williams. Another benefit open to any REAPS member is to take a cruise with other NAREIA members from around the country on their annual winter cruise.

This annual cruise has connected 5000+ investors from more than 70 cities on a fun-filled week at various warm and sunny ports of call, while also enjoying the opportunity to listen to and interact with nationally-known investment speakers. I was fortunate enough to participate on the thirteenth annual NAREIA cruise last month. Best of all, it was an educational experience that qualified as a business write-off!

It was also my very first cruise, and I thoroughly enjoyed it. Several other members of REAPS also attended, including Angelique Tinney, Sheila Lair, Shan Whiteside, and Chizu Salisbury. Nationally-known speakers who participated on the cruise agenda included Andrew Cordle, Anthony Chara, Carl Fischer, Larry Goins, Tom Hennigan, Jillian Sidoti, Robyn Thompson, Scott Whaley, Pete Youngs, and Tony Youngs, among others. Topics included private money investing, investing with real estate funds, treating your real estate investment as a business, multifamily investing, and finding the hidden market for properties.

Our cruise departed from San Juan, Puerto Rico and several of us took a few extra days to explore the bioluminescent bay of Fajardo by kayak, walk the streets of historic old San Juan, or visit the fortifications protecting the walled city. The cruise stopped at ports of call in St Thomas, St Kitts, Aruba and Curacao. I had fun snapping pictures of the many “fixers” available for sale on the islands (that is, when I wasn’t hiking through rain forest, swimming and snorkeling in the Caribbean, or sightseeing on shore excursions).

Two full days were spent at sea, and on those days we had full-day sessions conducted by the national speakers, anxious to promote their educational products to chapter leaders. For those of us involved in REAPS leadership, it was an opportunity to test-drive potential future speakers for our own association. I blogged about each of the educational sessions that I attended, and more detail on these sessions may be found there: www.wendywonder.blogspot.com.

Evening dinners were sit-down affairs (two formal nights) where NAREIA guests were able to table-hop to sit with whomever they wanted to meet or greet. There were also a few private NAREIA receptions and cocktail parties. These were great opportunities to network and learn from more savvy investors from all over the country. If you love to cruise, or are looking for an excuse to cruise, or simply want more opportunities to learn from experienced real estate investors in a relaxed environment, then you might want to consider going on next year’s cruise.

The cruise next year will be February 9-15 and costs $895 per person for a basic inside cabin. The cruise departs from Miami and travels to Grand Turk, Jamaica, and the Bahamas. For more information, contact NAREIA directly at 888-762-7342.

REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at [email protected] and be our guest for free!”

 

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Get ready to learn about HOT tax deductions for small business owners and real estate investors.

Mark J. Kohler will be our special guest for our REAPS monthly meeting in Bellevue on February 28th.

Here’s a preview of what Mark will be sharing with our members at our monthly meeting.

 

Please register NOW for Thursday’s meeting on February 28th.  CLICK HERE to register.

“REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at [email protected] and be our guest for free!”

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By Jillian Sidoti

T he JOBS Act (Jumpstart Our Business Startups) was passed in April 2013. It is meant to make it easier for raising capital for small businesses, including real estate companies. So how could you use the JOBS Act to your advantage?

Lift the Ban on General Solicitation

Well, yes, the JOBS Act is supposed to lift the ban on general solicitation for those companies that solicit funds ONLY from accredited investors. However, the SEC met on August 22nd to discuss the rules surrounding this “ban lift” and has delayed voting on it. So as of now, those companies looking for private investors are not allowed to use general solicitation or means of advertising to find investors. (But don’t worry, when I come out in September to speak at REAPS, I will teach you a bunch of awesome ways to find investors without using advertising).

Allow for A Crowdfunding Exemption

“What’s crowdfunding?” may be your first question. Crowdfunding is when companies look for small amounts of capital through a crowdfunding “portal” on the internet from many investors. For example, a real estate investor might need $50,000 to finish a rehab project, so they will post on a crowdfunding portal site to advertise for investors. Many investors will invest through the website and the portal will take care of all the details. Previously, this behavior of putting projects online for investments, was illegal. Now, as long as the portal itself is registered with the SEC, the small company looking for the investment dollars will be exempt from registration. However, the investors investing in the project will not be allowed to invest more than $10,000 or 10% of their net worth. Perfect for those smaller projects you might be working on.

Increase the Amount for Regulation A Filings

Regulation A filings used to be limited to $5,000,000 per company. Now, JOBS increases Regulation A filings are increased to $50,000,000. Regulation A’s, in the past, have not been popular. The reason because they are very hard for attorneys to complete, so they just don’t even offer them to their clients. Personally, the SEC has “lost” 3 of my Regulation A filings. Imagine doing a 700 page filing, sending it off, only for it to be lost by the government. Now, the SEC is reorganizing so there are more attorneys to review these types of filings.

About Jillian Sidoti…
Jillian Sidoti of the Law Office of Jillian Sidoti is the expert on money raising techniques for real estate companies. After working in commercial real estate doing condo conversions for many years, Jillian started a firm that specializes in securities transactional legal matters, such as Private Placement Memorandums, SEC compliance, Regulation A filings, Direct Public Offerings and Intrastate Offerings. Jillian also spends her time speaking at seminars educating real estate investors on how to legally raise capital for their real estate investment projects. Currently, Jillian teaches Finance and Accounting for the BS and MBA programs at the University of Redlands, drawing on her experience as Financial Analyst, Controller and CFO for many companies from manufacturing to real estate development. Jillian also teaches a Small Business Management class where students are taught the anatomy of a business plan.

“REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at [email protected] and be our guest for free!”

 

 

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Feb
07

Deed of Trust Foreclosures

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A Long Awaited Ruling On Challenge By MERS Ends In Anticlimax

By: Doug Owens
REAPS Legislative Committee

The Washington Supreme Court recently decided a challenge by two homeowners that attacked the system of “collateralized debt obligations” that has arisen during the past twenty years. Under this system, when a person borrows against a home, the promissory note and deed of trust that secures that note are “bundled” into one of many trusts. Shares in these trusts are then sold to institutional investors such as insurance companies and pension funds.

In Washington, mortgages are structured as a promissory note containing the obligation of the borrower to repay the loaned funds and a deed of trust that secures that obligation. The deed of trust is in form a deed by the borrower to a trustee, and the lender is called the “beneficiary”. The terms of the deed of trust are that if the borrower does not repay the loan or otherwise breaks any of the covenants of the deed of trust, then the trustee has the power to sell the property at auction and apply the proceeds to pay the beneficiary. A promissory note is by its nature a negotiable instrument of the same type as a check. It is negotiated by having the person to whom the obligation is owed, called the holder, endorse it to someone else in exchange for something, usually money.
[stextbox id="black"]“This case may produce more litigation if additional facts are developed on the record before the federal court.”[/stextbox]

In order to attempt to keep track of the many notes and deeds of trust that underlie the investments of the big investors, a system called Mortgage Electronic Registration System was created in the 1990s. This system allowed the users to transfer massive numbers of deeds of trust among lenders and investment trusts without the cumbersome process of recording the transfers locally. In mortgages handled by MERS, that entity rather than the lender is usually named the beneficiary of the deed of trust.
Many lenders have gone out of business or been acquired by others in “shotgun” weddings arranged by regulators. In the process sometimes the promissory notes and the deeds of trust are separated. Many homeowners are in financial difficulty due to the recession and the values of their homes have plummeted leaving them “under water.” When they are unable to pay their mortgage payments, in MERS handled mortgages, MERS typically initiates a nonjudicial foreclosure.

One condition of foreclosure is that it may be initiated only by the “holder of the instrument or document evidencing the obligations secured by the deed of trust.” Two homeowners sued in federal court and argued that MERS was not a lawful beneficiary because it was not the “holder” of their promissory notes and it could not name the holder of those notes.

The federal court referred this question to the Washington court for decision on this point of law. Against the argument made by MERS that Washington law allows MERS to be an “agent” of the holder of the promissory note and that this is sufficient to authorize MERS to begin nonjudicial foreclosures, the court held that the plain language of Washington’s law required that only the “actual holder” of the promissory note was eligible to begin such proceedings.

The Washington court anticlimactically threw up its collective hands and said that it needed more information on the specific transactions involved in the federal case in order to answer. The Washington Supreme Court did proceed to the third question the federal court asked, which was whether the homeowners would have a case under the Consumer Protection Act against MERS for deceptively claiming to be the beneficiary in instituting foreclosure proceedings. The court said it was possible that the homeowners would have such a case, depending on whether or not they could prove that they were injured by the deception involved.  This case may produce more litigation if additional facts are developed on the record before the federal court. In addition, we may expect the lending industry to be in Olympia clamoring for a legislative “fix.”  The preceding is intended as education and may not be construed as legal advice.

About the author…
Doug Owens practices real estate law and general business law from his office in Seattle. He offers a 20% discount for REAPS members and he can be reached at (206) 985-6679 or [email protected]

“REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi. We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at [email protected] and be our guest for free!”

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