Thursday, August 29, 2013

A Group Effort: A New Law May Lead to More Group Real Estate Investing

ATLANTA, GA– With the recession coming to an end and commercial property values climbing, now is an ideal time to invest in commercial real estate. However, many investors simply do not have the cash to buy properties by themselves; for these people, group investing offers a great way to reap the benefits of the recovering real estate market.

Gene Trowbridge
Furthermore, those who raise money for commercial real estate purchases through the private placement of securities may soon find that task a little easier, thanks to a new federal law that permits such investments to be advertised to the public under certain circumstances.

Those were some of the points made on the most recent episode of the “Commercial Real Estate Show” radio program, hosted by Michael Bull of Bull Realty. Bull and his guest, author and attorney Gene Trowbridge of The Trowbridge Curriculum, discussed a range of topics, including the advantages of group investing, securities, private placement offerings and the impending change in Regulation D.

Michael Bull
The federal Securities and Exchange Commission’s (SEC) Regulation D exempts securities from having to register with the SEC, a process that can cost hundreds of thousands of dollars, if their investors are deemed to be “accredited” — meaning they each have a net worth of $1 million (not including their homes) or earn more than $200,000 year.

Regulation D has, until recently, banned the public advertising of the investments. However, under a provision in the Jumpstart Our Business Startups (JOBS) Act that is set to take effect in September, those seeking to raise funds under Rule 506 of Regulation D — which allows sponsors to raise an unlimited amount of money — will soon able to solicit accredited investors from the general public by advertising. 

The sponsor will bear the burden for determining that his investors are accredited, Trowbridge said.

The new rule will “have a major positive effect” on group real estate investing, Trowbridge said. About $1 trillion was raised for commercial real estate purchases through the private placement of securities in 2012. With the new rule, Trowbridge said the annual amount could rise by up to 15 percent in the coming years. “That’s a lot of money,” he added.

The major advantage to group investing is that investors without a lot of real estate experience can place their funds in the hands of someone who has considerable experience, management expertise and proven skills, Trowbridge said.

Additionally, group investing often makes it easier for investors to pursue opportunities outside of the market in which they live, Trowbridge added. For example, Trowbridge said many of the California investors he works with are interested in several states in the Southeast, including Texas, Georgia, the Carolinas and Alabama.

For a complete copy of the company’s news release, please contact:

Stephen Ursery
The Wilbert Group

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