So, what’s the problem with that?  Like much legislation that is designed to “protect consumers”, it can include some very negative effects on certain niche people or businesses.  In this case, the SAFE Act can potentially make Owner/Seller Financing ILLEGAL in some states (buyer or selling), and may also make it illegal for your Private Lenders to fund your deals without first obtaining a license to do so! This is a new twist on what we have seen with other recent legislation since YOUR LENDER can even get into trouble here, not just you!  However, if you want to keep operating your business with private capital and maintaining good relationships with those lenders, it would certainly be in your best interests to learn the new requirements in your state and understand how to navigate and/or legally bypass them so that you can safely continue to operate.

Although this Act came to exist back on July 20th, 2008 as a key component of HERA (Housing and Economic Recovery Act), HUD established a deadline for states to create and pass their OWN legislation that complies with the minimum standards of the SAFE Act no later than July 31st, 2009 for some states, and July 31st, 2010 for the rest.  That means that ALL states will have this new legislation in force by now, but because it was left to the individual states to define their own standards, every stay can and will have different rules.

If you intend to use private money or owner/seller financing, either buying or selling, in your business, you NEED to be on this webinar! This is cutting edge information that you won’t find anywhere else.  Most attorneys cannot advise you on this legislation yet as they are just now learning about it themselves!   Chris will not only discuss how the new Act may limit you, but also the tools and tactics that you will need in your real estate arsenal to avoid trouble. As with most things, the fix can be fairly simple, as long as you know the rules.

Space is limited.

Reserve your Webinar seat now by clicking HERE Now!

This webinar invitation is available on a first come, first served basis. Register now to secure your seat!

This is the second post in a series where I answer student questions from Costa Rica. In the video that accompanies this post, you can go for a ride with me in the cockpit of a “puddle jumper”. If you’ve never flown on a small plane before, it’s quite an experience. Tag along with me for a quick ride over the rain forest, and then I’ll answer a couple of student questions about real estate investing and private money lending. To see the video for this blog, just click the links in the questions below. You can always view the library of videos I’ve posted on real estate investing and private money on the CM Yates YouTube channel here: http://www.youtube.com/user/cmyatescapital

Question #1: We sell a lot of foreclosed property on ebay. Until recently, this was a fantastic cash business. However, things are going bad quickly. We’ve proven in the past that we can sell these properties with owner financing for substantially more than we can by selling them for cash. We would prefer to go to straight seller financing sales. The problem is, financing won’t cash flow our business. How can we put together the “cash flow financing” for 2 years that will allow us to make the switch in this environment? After 2 years, we’re self sustaining…….until then, we’re in bad need of cash. Thanks, CD
- Chandler D., AR & MO, USA

Sounds to me like you need a more stable (longer term and less expensive) funding model for your deals, Chandler. See my video response to your question here in Part 1 of this week’s video blog, where I can provide more information: http://www.youtube.com/watch?v=IjCad14NK64

Question #2:
I just read an the article about the SEC’s charges against someone for putting on “free lunch” seminars, to allegedly scam senior’s out of their retirement money. The article mentioned a new SEC site (http://investor.gov) that is supposed to educate investors and help them avoid scams, have you seen the site? If you have, what do you think about the material on the site?
- Stephanie P., Atlanta, GA, USA

Stephanie, you can see my initial response to your question in Part 2 of this video blog, found here: http://www.youtube.com/watch?v=nYaVnPB7yXE After just taking a look at the SEC site, I believe that it offers a fair description of what the SEC does and some very valid resources for investors. A lot of people are scared to invest in anything right now. On one hand, most people just lost a lot of money in the stock market and don’t trust it enough to go back in. On the other hand, there are stories left and right about people stealing money from retired folks or ripping someone off this way or that. What’s an investor to do? Well, they should get educated about the investments that they are considering, do some due diligence, and move ahead. Sitting on your investment capital is one of the worst things a person can do right now, and there are a lot of viable places to put it to work for a pretty strong yield with stable collateral. I, of course, favor real estate. But, that’s what I know. I definitely believe that a person should invest in what they know, and nothing else.

While on the topic of investments, a recent e-mail conversation with Amy Sheflin of Entrust New Direction IRA revealed the following tid-bits for the current year:

“2010 offers a unique opportunity for some to avoid that altogether. In 2010, the requirements to convert an IRA to a Roth IRA are waived. That allows investors to pay tax on the value of the IRA account now (at their 2010 income tax rate). Once that tax is paid and the asset is held by a Roth IRA, when the property is distributed at retirement NO tax is due on the asset at all. This is true no matter how much the value increases between now and when the investor retires. In the past, the investor needed to make less than $100,000 to take advantage of this option, but again in 2010 that requirement is waived and anyone can convert to a Roth. It is a good thing for real estate investors to be aware of for 2010.”

“On the report offered at http://RealDistribution.NewDirectionIRA.com/ we go into a lot of detail as to the taxes due when a property is taken as a distribution.”

Look for next week’s post where I take you down the “roads” of Costa Rica through the jungle and to one of my favorite spots on the coast. I’ll be answering even more questions then and have some exciting new locations planned as well, so keep your questions coming in! Pura Vida!

I’ve just returned to the US from nearly a month travelling in Central America. After surviving five earthquakes and one volcano eruption, I’m safely back at home getting caught up on all of my real estate updates for you. I have several videos coming soon for you which will show you some of my adventures in Costa Rica, including their idea of roads, and off-grid resort properties. Fun stuff.

This week, I’ve posted a new video which was recorded just before I left. If you have ever raised private funds for your real estate deals or have thought about it, you’ve got to see this! After years of talking to different attorneys about SEC rules versus state rules, when is an investment a security versus when is it not, and receiving different answers, I decided to go right to the source. Rather than getting someone’s opinion this time, I interviewed the Securities Fraud Investigator from the Attorney General’s Office! Yep, he’s the guy with handcuffs that goes to arrest folks that have committed securities fraud. The video is short, but I can guarantee that you won’t see anything like this again. Check it out on this page now: http://cmyatesnews.com

If you are using private funds and are pretty sure that you are doing it properly, you might want to go watch this now anyway. You might be suprised how easy it is to get into trouble, but also relieved to know that they are only a few simple things you need to do in order to raise a lot of private money legally in most states.

I will soon release some great video of me answering your questions, recorded in Costa Rica, as well as the much-anticipated announcement of my advanced private money home study course. Stay tuned!

To Your Success,

Chris Yates