- Joined
- Dec 16, 2008
- Messages
- 1,005
Hello REIN World, Now that we have launched our latest fund and have become Limited Market Dealers, there have been a lot of questions about the Ontario Securities Commission (OSC) and why we have registered. We found that a lot of people at the past ACERS weekend were asking us a tone of questions. So, I thought I would take some time to provide some answers.
Over the next few weeks, I am going to share some information so you understand and know how the OSC works.
Before I do, DISCLAIMER: I AM NOT A LAWYER, you should verify all information regarding Provincial Securities Regulations.
Now, onto some business...
Why do you need to pay attention to the OSC or other Provincial Securities Commissions?
The typical REIN Join Venture does NOT fall under the OSC in it`s most traditional structure.
Where you begin to cross the line is where the investor is "Passive" meaning they have absolutely no involvement. Berry and Robert have done a fantastic job to structure agreements which avoid this.
Also, the JV work sheet in the JV Secrets book Don and Russell have created helps to avoid any issues.
So, what are the key points about this:
1) the investor is on title (either jointly or 100%) and therefore qualifies for the mortgage
2) there are certain business decisions which are unanimous
3) items such as major repairs, cash calls, and when to refinance or sell are define in the beginning of the JV
4) there is an opportunity for the investor to take the JV over.
In all cases, the investor has a clearly active roll in the investment.
If all of these are removed, then you run the risk of creating a passive investment which, if there is a problem, can be considered as a securities issue.
Conclusion: follow the REIN JV Process and make sure your investor is involved in key activities you are free and clear
Promotions - One of the major issues for the OSC and increasingly other provinces.
There are three major issues around promotions:
1) who you promote too and how,
2) what you promote,
3) how you represent yourself .
While we all know that Real Estate is an Excellent investment where investors can earn 10% - 50% ROI passively because we are Real Estate Experts, advertising this can create a red flag with the OSC.
Again, REIN has done a great job by providing us the following term for our business cards, we call ourselves "Real Estate Investors"
The key for the OSC is they want to make sure you do not over promote unrealistic returns (even if they are possible). Terms such as Excellent Returns or Guaranteed Performance are taboo.
If you are a trainer, Realtor or mortgage broker, you should also disclose your profession and that your client shouldn`t rely on your professional designation to make an investment.
Lastly, advertising - this is the biggest area of concern and unless you are registered, you are extremely limited to advertising except for in areas such as MyREINSpace. From what our lawyers have been telling us, you CAN NOT advertize JVs in the paper, etc.
Well I hope this helps and remember to follow the REIN JV Secrets and you will be perfectly fine. In fact, if you follow the process as Russ has defined it... you should be able to close 4 - 6 properties every month.
More to come later.
Over the next few weeks, I am going to share some information so you understand and know how the OSC works.
Before I do, DISCLAIMER: I AM NOT A LAWYER, you should verify all information regarding Provincial Securities Regulations.
Now, onto some business...
Why do you need to pay attention to the OSC or other Provincial Securities Commissions?
The typical REIN Join Venture does NOT fall under the OSC in it`s most traditional structure.
Where you begin to cross the line is where the investor is "Passive" meaning they have absolutely no involvement. Berry and Robert have done a fantastic job to structure agreements which avoid this.
Also, the JV work sheet in the JV Secrets book Don and Russell have created helps to avoid any issues.
So, what are the key points about this:
1) the investor is on title (either jointly or 100%) and therefore qualifies for the mortgage
2) there are certain business decisions which are unanimous
3) items such as major repairs, cash calls, and when to refinance or sell are define in the beginning of the JV
4) there is an opportunity for the investor to take the JV over.
In all cases, the investor has a clearly active roll in the investment.
If all of these are removed, then you run the risk of creating a passive investment which, if there is a problem, can be considered as a securities issue.
Conclusion: follow the REIN JV Process and make sure your investor is involved in key activities you are free and clear
Promotions - One of the major issues for the OSC and increasingly other provinces.
There are three major issues around promotions:
1) who you promote too and how,
2) what you promote,
3) how you represent yourself .
While we all know that Real Estate is an Excellent investment where investors can earn 10% - 50% ROI passively because we are Real Estate Experts, advertising this can create a red flag with the OSC.
Again, REIN has done a great job by providing us the following term for our business cards, we call ourselves "Real Estate Investors"
The key for the OSC is they want to make sure you do not over promote unrealistic returns (even if they are possible). Terms such as Excellent Returns or Guaranteed Performance are taboo.
If you are a trainer, Realtor or mortgage broker, you should also disclose your profession and that your client shouldn`t rely on your professional designation to make an investment.
Lastly, advertising - this is the biggest area of concern and unless you are registered, you are extremely limited to advertising except for in areas such as MyREINSpace. From what our lawyers have been telling us, you CAN NOT advertize JVs in the paper, etc.
Well I hope this helps and remember to follow the REIN JV Secrets and you will be perfectly fine. In fact, if you follow the process as Russ has defined it... you should be able to close 4 - 6 properties every month.
More to come later.
