Rental Housing Journal Arizona
April 2014 - Vol. 6 Issue 4 7. Dear Maintenance Men:
2. Understanding the Financial Music
8. Shoptalk
3. How the Internet of Things (IOT) Will Change Property Security and Monitoring
11. Exit Strategy Pt. II: Repositioning Your Real Estate Assets to Simplify Your Life
5. Three More Ways to Fill Those Vacancies
12. Storm Damage: Rights and Remedies
6. Become A Daily Learner… Today! by Ernest F. Oriente
EXIT EXIT
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Oh No, Not Again! By Alan Langston Executive Director AZREIA
R
ent rates aren’t increasing nearly as fast as the price of existing single family homes in Arizona, especially Greater Phoenix. The price an investor has to pay to add an additional property to their portfolio is much closer to a retail price and is rising. It is difficult to predict price and if you try to predict price out into the future, you will be wrong far more often than you will be right. So, while price is “expected” to remain flat for a period of at least a few months, it is difficult to know for sure. We know is it is much more expensive to acquire a property than it was last year, the year before that and the year before that, and the year before that. The issue? When is history going to repeat itself for the rental property owner? Okay, I’ve kind of talked in circles. Here is what I’m getting at. For much of Arizona’s history, rental property rates did not fall into line with much of the country and the standard ratio of rents equaling 1% of the property value didn’t apply here. Tons of rental property was bought using high levels of leverage. Investors counted on the property appreciating and bought rental Continued on page 4 Professional Publishing Inc. PO Box 6244, Beaverton, OR 97007
New Rules for Raising Capital for Real Estate Investments By Darrel Dickson ApartmentsForSale.com
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rowd funding rules for real estate changed recently and with the available technology the landscape for raising funds for real estate investments in the future will be changed. The Jobs act created an entirely new exemption from registration of the securities act which will permit companies to publicly offer and sell up to a million dollars in securities over 12 months without needing to register. There are restrictions and individual investors annual income or net worth less than one hundred thousand dollars may invest no more than the greater of $2000 or 5% of his or her annual income or net worth. If his or her income or net worth is higher than $100,000 he or she may invest no more than 10% of annual income or net worth and never more than hundred thousand dollars. A new type of broker known as a funnel portal must be used to facilitate the sale. The funnel portal will be required to register with the SEC and other organizations and to confirm the investors satisfy the investment requirements. Companies that use the crowd funding process will have to file with the SEC. Certain information of the operating companies involved in raising funds will need to be provided to the SEC: such as the business plan description, company’s capital
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structure, and intended use of the proceeds, audited financial statements will be required for offerings of more than $500,000. The Offering Company will need to file ongoing reports with the SEC based on rules yet to be determined by the SEC Crowd funding is an interesting new opportunity for syndicators to raise capital for real estate investments. Real estate operators will be able to raise capital online from groups of investors in an automated way Real estate investments typically have been illiquid. Investors have plenty of opportunities to invest in stocks and bonds but when it comes to actually access private real estate deals the process in the past has been
difficult for private investors to participate. Crowd funding will change all of that. Crowd funding eliminates the barriers that are typically associated with real estate investing such as having the time and expertise, and knowledge to invest can make investing in real estate a challenge. But pulling your money together through crowd funding you can access investment opportunities that otherwise would not be available to a busy professional to manage a property by themselves. You can have others with the knowledge and experience and the time to manage your real estate investments. In the near future, I foresee that you have Continued on page 5
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