Topic: RentalStarter - A Midwest Real Estate Investment Company - page 47. (Read 120426 times)
Are you still leaning toward bitfunder for the exchange?
Tried to make some of the verbiage clearer on the website and some other things at the request of ukto. Looks like we'll be able to list it in the next day or two.
Okay, can you please elaborate further on what you are offering.
Your website tells that the investors get 60% of the net income.
Does the deal includes real estate equity as well?
Thanks!
Your website tells that the investors get 60% of the net income.
Does the deal includes real estate equity as well?
Thanks!
Investors have 100% equity in the company and subsequent real estate holdings. This includes equity in all the assets involved.
Okay, can you please elaborate further on what you are offering.
Your website tells that the investors get 60% of the net income.
Does the deal includes real estate equity as well?
Thanks!
Your website tells that the investors get 60% of the net income.
Does the deal includes real estate equity as well?
Thanks!
Following and willing to invest up to 2-5BTC. Simply to help the non-BTC companies get off the ground 
. Who knows, might become a poster-child for how to use BTC and BTC Micro-investment to get startups off the ground (non-tech related ones included).
. Who knows, might become a poster-child for how to use BTC and BTC Micro-investment to get startups off the ground (non-tech related ones included).That would be great
I've been reading over many of these forum threads for other securities and it seems that many have not run a business before thus leading to major complications. Transparency is our goal (We need it with the other product we're developing on rentalstarter).
Following and willing to invest up to 2-5BTC. Simply to help the non-BTC companies get off the ground . Who knows, might become a poster-child for how to use BTC and BTC Micro-investment to get startups off the ground (non-tech related ones included).
. Who knows, might become a poster-child for how to use BTC and BTC Micro-investment to get startups off the ground (non-tech related ones included). Expanding your capital structure is a good idea. One suggestion I would have is that you make it clear to equity holders the seniority of bonds (if you decide to issue). I know it sounds obvious but there are varying levels of sophistication on here. I would also be a little wary of the fact that currency risk becomes a much bigger deal with bonds as compared to equity. I strongly suggest that you consider, at least, a soft BTC:USD peg on the bonds.
With respect to having a 3rd party audit, could you expand on what your expectations and goals for that would be?
With respect to having a 3rd party audit, could you expand on what your expectations and goals for that would be?
The idea is just to create more levels of transparency to break out from the rest of the BTC listed companies on the various exchanges who don't even prepare financial reports, let alone submit themselves to audits.
Expanding your capital structure is a good idea. One suggestion I would have is that you make it clear to equity holders the seniority of bonds (if you decide to issue). I know it sounds obvious but there are varying levels of sophistication on here. I would also be a little wary of the fact that currency risk becomes a much bigger deal with bonds as compared to equity. I strongly suggest that you consider, at least, a soft BTC:USD peg on the bonds.
With respect to having a 3rd party audit, could you expand on what your expectations and goals for that would be?
With respect to having a 3rd party audit, could you expand on what your expectations and goals for that would be?
Yea, I would avoid the whole getting paid in BTC thing. I understand why people are trying to suggest some currency risk mitigation strategies, but it is just not feasible in this case. Anybody who invests in this should treat it as a regular investment in a REIT on the NYSE. I can appreciate that your mention of it was merely a response to others rather than something you were advocating.
Your description of your market is both fascinating and makes me jealous.
With respect to rehab (and other) costs, the key is to develop a systematic approach that minimizes subjective judgements and can be followed consistently from one activity to another. My suggestion would be something like this:
Step 1: Does this activity fall under "management"? If yes, then do not charge for my time/labour as this is covered by the management fee.
Step 2: If it is not management, then determine if the activity can be performed by a 3rd party for which the costs can be easily and clearly identifiable (i.e. there is a well known market with clear prices).
Step 3a: If you answered yes to 2, then bill the company the identifiable price less a reasonable discount (say 10%-20%) to be conservative.
Step 3b: If you answered no to 2, then bill the company based on cost of supplies + a premium to cover labour. You should have a clear labour rate for most activities, something like $20/hr (or w.e.) setup from the start.
Just spit-balling some ideas.
Your description of your market is both fascinating and makes me jealous.
With respect to rehab (and other) costs, the key is to develop a systematic approach that minimizes subjective judgements and can be followed consistently from one activity to another. My suggestion would be something like this:
Step 1: Does this activity fall under "management"? If yes, then do not charge for my time/labour as this is covered by the management fee.
Step 2: If it is not management, then determine if the activity can be performed by a 3rd party for which the costs can be easily and clearly identifiable (i.e. there is a well known market with clear prices).
Step 3a: If you answered yes to 2, then bill the company the identifiable price less a reasonable discount (say 10%-20%) to be conservative.
Step 3b: If you answered no to 2, then bill the company based on cost of supplies + a premium to cover labour. You should have a clear labour rate for most activities, something like $20/hr (or w.e.) setup from the start.
Just spit-balling some ideas.
They sound good to me, i'll have to figure a way to incorporate them and/or add them on the design document.
Additionally, we're looking at using a 3rd party auditor/accountant to audit our books on a regular basis to provide additional transparency.
Additionally - One thing I'm looking at/considering is using this as the primary 1st round for the core company and no other share offers. I talked to ukto about this and what my concept is would be to have the core company @ 100k shares ($110k USD or so) , then for subsequent ventures, issue a bond that pays high daily interest in order to acquire-rehab-refinance larger properties that the initial cashflow/reinvestment can't deal with. This would increase shareholder equity quite a bit i think and would help us access larger capital pools.
Yea, I would avoid the whole getting paid in BTC thing. I understand why people are trying to suggest some currency risk mitigation strategies, but it is just not feasible in this case. Anybody who invests in this should treat it as a regular investment in a REIT on the NYSE. I can appreciate that your mention of it was merely a response to others rather than something you were advocating.
Your description of your market is both fascinating and makes me jealous.
With respect to rehab (and other) costs, the key is to develop a systematic approach that minimizes subjective judgements and can be followed consistently from one activity to another. My suggestion would be something like this:
Step 1: Does this activity fall under "management"? If yes, then do not charge for my time/labour as this is covered by the management fee.
Step 2: If it is not management, then determine if the activity can be performed by a 3rd party for which the costs can be easily and clearly identifiable (i.e. there is a well known market with clear prices).
Step 3a: If you answered yes to 2, then bill the company the identifiable price less a reasonable discount (say 10%-20%) to be conservative.
Step 3b: If you answered no to 2, then bill the company based on cost of supplies + a premium to cover labour. You should have a clear labour rate for most activities, something like $20/hr (or w.e.) setup from the start.
Just spit-balling some ideas.
Your description of your market is both fascinating and makes me jealous.
With respect to rehab (and other) costs, the key is to develop a systematic approach that minimizes subjective judgements and can be followed consistently from one activity to another. My suggestion would be something like this:
Step 1: Does this activity fall under "management"? If yes, then do not charge for my time/labour as this is covered by the management fee.
Step 2: If it is not management, then determine if the activity can be performed by a 3rd party for which the costs can be easily and clearly identifiable (i.e. there is a well known market with clear prices).
Step 3a: If you answered yes to 2, then bill the company the identifiable price less a reasonable discount (say 10%-20%) to be conservative.
Step 3b: If you answered no to 2, then bill the company based on cost of supplies + a premium to cover labour. You should have a clear labour rate for most activities, something like $20/hr (or w.e.) setup from the start.
Just spit-balling some ideas.
"#1 - The option to rent in BTC is just a option, no one will be forced to utilize BTC to make a rental payment. Having said that we are talking to a mining company who may be interested in a commercial facility if/when we can find one for rehab & rental. In that case it would be a mixed BTC+USD type rent between multiple tenants."
Yes, mining companies would be the only lessee for whom it makes sense to offer hybrid payment. The potential for a mining tenant raises an additional issue: Are you planning of have it be triple net? Exposure to energy costs should probably be mitigated.
"#2 - We're not looking to diversify heavily early on, strictly SFD and duplex rentals with high cap rates. We're looking at 70%-80% LTV on most of the projects, leverage will be used after the properties have been rehabbed and rented out so we can show the bank(s) that there's already cashflow to hit the LTV values we're looking at. I can get into more of the details, those sample properties on the site are just samples because the market moves too quick to do a full disclosure on a wide range of properties because each has unique rehab costs, closing costs and the like. Median DOM in my area for flips/rehab properties that will meet our purchase criteria is around 45 days or so, great properties are 1 week. I'm trying to walk the line between gory details that won't make sense to most investors and providing enough information. I can get sample hud-1s and the like prepped by a local title company, but even those will only do me so good on figuring out closing/finance costs. "
Yea, I can appreciate the need to balance disclosure with confusing laypersons and revealing operationally sensitive information. Maybe some background on prior transactions? The value-add numbers for rehab on the site look far "juicer" than I would expect (although that may be a function of the area and your management skillset), cap rates look reasonable. The property cost in your area looks cheaper than what I am used to, the $100K will go far it looks if you can indeed get something close to 80% LTV.
"#3 - The way we stated the management/rehab %s is what we looked at with other listed companies and was suggested, I can break it down further without much of a issue. "
Yea thats not really standard practice (nor does it make alot of sense). Management fee should be a fixed % of straight rents and then a "bonus" based on a normalized cashflow number (i.e. 5% of normalized FFO in excess of X). There is additional complexity here if you guys are doing the rehab yourself (i.e. what part of that work is covered by your mgmt fee vs. additional payments as maintenance/rehab expense).
Yes, mining companies would be the only lessee for whom it makes sense to offer hybrid payment. The potential for a mining tenant raises an additional issue: Are you planning of have it be triple net? Exposure to energy costs should probably be mitigated.
"#2 - We're not looking to diversify heavily early on, strictly SFD and duplex rentals with high cap rates. We're looking at 70%-80% LTV on most of the projects, leverage will be used after the properties have been rehabbed and rented out so we can show the bank(s) that there's already cashflow to hit the LTV values we're looking at. I can get into more of the details, those sample properties on the site are just samples because the market moves too quick to do a full disclosure on a wide range of properties because each has unique rehab costs, closing costs and the like. Median DOM in my area for flips/rehab properties that will meet our purchase criteria is around 45 days or so, great properties are 1 week. I'm trying to walk the line between gory details that won't make sense to most investors and providing enough information. I can get sample hud-1s and the like prepped by a local title company, but even those will only do me so good on figuring out closing/finance costs. "
Yea, I can appreciate the need to balance disclosure with confusing laypersons and revealing operationally sensitive information. Maybe some background on prior transactions? The value-add numbers for rehab on the site look far "juicer" than I would expect (although that may be a function of the area and your management skillset), cap rates look reasonable. The property cost in your area looks cheaper than what I am used to, the $100K will go far it looks if you can indeed get something close to 80% LTV.
"#3 - The way we stated the management/rehab %s is what we looked at with other listed companies and was suggested, I can break it down further without much of a issue. "
Yea thats not really standard practice (nor does it make alot of sense). Management fee should be a fixed % of straight rents and then a "bonus" based on a normalized cashflow number (i.e. 5% of normalized FFO in excess of X). There is additional complexity here if you guys are doing the rehab yourself (i.e. what part of that work is covered by your mgmt fee vs. additional payments as maintenance/rehab expense).
Branny, out of curiosity, how much are you looking to raise?
A couple of things:
1) Having any portion of the rent denominated in BTC is a bad idea. First, your typical renter does not have the sophistication (even if you manage everything and explain it to them, you will confuse/scare them). Second, unless you are dealing with commercial renters, the client is just going to up and leave if BTC shoots up (you collect nothing then) and if it falls you will lose on the FX. You can't denominate payment in a currency outside of what all the alternative options for the renter are (i.e. the rest of the apartments in your area which are strictly USD) no matter which way BTC moves, you lose.
2) You need to provide details with respect to your current asset base, what the IPO funds will be used for, etc. Unless your are dealing with micro-MBSes, there is no way to really diversify in RE without millions. Therefore, prospective investors need to know the exact details about what you are buying because the quality of each individual asset becomes so important. Your site indicates 3 new properties will be purchased and rehabbed. We would need to know more about these prospective purchases (i.e. what is your leverage going to be, estimated financing costs, what type of apartments, number of apartments, etc).
3) You need to do a better job with respect to clarifying what % management fees and retained earnings (for growth) are going to be. Your current calculation is weak in that maintenance (different than growth) should be included in what you call "Net income" (as an aside for Real-estate the term is not really applicable, you should be using something like AFFO) and you should not be lumping management fee in with maintenance and growth. If you plan to do some of the maintenance in-house then you should bill the company at FMV rates and count that as maintenance expense rather than management fees.
This is just the tip of the iceberg. There are alot more question that I think you need to be able to answer. The first step is hashing out your business (i.e. prior operations, use of IPO funds, etc).
None of what I wrote is meant to besmirch this offering or insult you. I am just trying to provide some guidance. I apologize in advance if I am being too harsh. I have a fair amount of experience with Real Estate companies (at the REIT level) in both reporting and finance, if you have any questions just ask.
1) Having any portion of the rent denominated in BTC is a bad idea. First, your typical renter does not have the sophistication (even if you manage everything and explain it to them, you will confuse/scare them). Second, unless you are dealing with commercial renters, the client is just going to up and leave if BTC shoots up (you collect nothing then) and if it falls you will lose on the FX. You can't denominate payment in a currency outside of what all the alternative options for the renter are (i.e. the rest of the apartments in your area which are strictly USD) no matter which way BTC moves, you lose.
2) You need to provide details with respect to your current asset base, what the IPO funds will be used for, etc. Unless your are dealing with micro-MBSes, there is no way to really diversify in RE without millions. Therefore, prospective investors need to know the exact details about what you are buying because the quality of each individual asset becomes so important. Your site indicates 3 new properties will be purchased and rehabbed. We would need to know more about these prospective purchases (i.e. what is your leverage going to be, estimated financing costs, what type of apartments, number of apartments, etc).
3) You need to do a better job with respect to clarifying what % management fees and retained earnings (for growth) are going to be. Your current calculation is weak in that maintenance (different than growth) should be included in what you call "Net income" (as an aside for Real-estate the term is not really applicable, you should be using something like AFFO) and you should not be lumping management fee in with maintenance and growth. If you plan to do some of the maintenance in-house then you should bill the company at FMV rates and count that as maintenance expense rather than management fees.
This is just the tip of the iceberg. There are alot more question that I think you need to be able to answer. The first step is hashing out your business (i.e. prior operations, use of IPO funds, etc).
None of what I wrote is meant to besmirch this offering or insult you. I am just trying to provide some guidance. I apologize in advance if I am being too harsh. I have a fair amount of experience with Real Estate companies (at the REIT level) in both reporting and finance, if you have any questions just ask.
Just to let everyone know, we're in the final stages of being listed on Bitfunder. Just waiting on a few things from ukto before we go live.
this sounds like a very interesting idea.
+1 for .01B
Personally, I would consider exchanging on btct.co as well, I know a lot of traders that use that website because it's difficult to get funds to bitfunder. Also, I like the .01 B share rate as that will attract more investors.
What trading exchange will the shares be for sale on? Also .1 BTC is ~$13 not $5.
Actually i've sort of changed my mind after talking to some guys about it, they wanted to make the share price even lower at .01 so I could get investors who are skiddish at even .1btc (So around $1.25/share).
I'm leaning towards BitFunder right now, however my brother has a offering on LitecoinGlobal and has nothing but good things to say about it. I have even considered listing it on both websites, but still leaning towards bitfunder at the moment.
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