Private investment

[2B]

Quote:

Originally Posted by Bored Beyond Belief That's not true at all. I'm sure your heart in the right place with the comment and you certainly should be careful in these type of deals but "accredited investor" this is a securities/legal term. Instead of getting into all the detail I'll refer you to Accredited investor - Wikipedia, the free encyclopedia.

I'm well aware of what an "accredited investor" is from a legal standpoint. From a practical standpoint it is the perfect rube in a financial scam. It's what you have to be to invest in a hedge funds, drilling partnerships or private REITs. Most make lots of money for the principals but for the investors - not so much. Really good deals don't need a mob of commissioned sales people out looking for money from small fish.

[2B]

To the OP,

You have a substantially different deal than what I'm used to seeing. My only question is why were you invited to their party? I'm very suspicious of offers of great potential wealth from strangers. A really good deal would have been gobbled up by people close to the insiders.

[Ronstar]

I've been an investor in a private business and also in a rental real estate llc. I've since sold my share of the business and we are in the process of selling off the real estate. IMO, private investments are not good investments for those about to RE. They are generally highly illiquid, and quite volatile. They really can't be counted on as retirement $ until they're liquidated.


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[phil1ben]

Quote:

Originally Posted by 2B To the OP, My only question is why were you invited to their party? I'm very suspicious of offers of great potential wealth from strangers. A really good deal would have been gobbled up by people close to the insiders.

Remember everyone is very good at finding reasons not to do something. My personal philosophy is to be running into the shopping center when all are fleeing.

However, the above comment is on point. You do not have a relationship with the broker. Why then did he call you if this was such a good deal? How many brokers called you to buy shares when Alibaba was going public? I did not get a call and I have a relationship with a brokerage firm. Many things you have written would make me nervous.

As an aside I did get a similar call a few years ago to buy into a derivatives exchange that established spreads on mortgage backed securities. This is a field I have experience in. I passed. Don't know how the investment turned out.

[ATby55]

The speed to decide is being explained as the equity seats are running out...when first heard it was 84 of the 100 were taken last week and then 9 more as of friday..... do wonder why "us"....it seems that they are at end of financing and just need to close it out to proceed, so got this broker involved to do so...

Yes, we are lucky in our current "as is" financial situation.

Projection estimate is the share would be worth "conservatively" $2m in 5 yrs and be giving off $100k annual dividends...

[ATby55]

Phil1ben, was the mbs deriv exchange approved by Fed? The fact that this one has been approved has been emphasized as being key...that all approved exch succeed..

I merely got word of this because I was on his distribution list...tbh - wish I wasn't at this pt...problem is it sounds like this is so far along it will happen which will hurt

[2B]

Quote:

Originally Posted by ATby55 I merely got word of this because I was on his distribution list...tbh - wish I wasn't at this pt...problem is it sounds like this is so far along it will happen which will hurt

I'm sure you'll be watching this. Keep us posted on how you lost $2MM due to the slugs here on the forum.

i've known people to make decent money owning buildings - offices, apartments, strip centers.... These were owned outright or with family members. I've never known anyone who tells me that they bought something after a cold call from a broker/sales person for a private placement and made a great return. I have heard tales of frustration and anger directed towards the general partners and the long departed sales person.

If you run in the right circles, all bets are off - maybe.

[2B]

Quote:

Originally Posted by ATby55 The speed to decide is being explained as the equity seats are running out...when first heard it was 84 of the 100 were taken last week and then 9 more as of friday..... do wonder why "us"....it seems that they are at end of financing and just need to close it out to proceed, so got this broker involved to do so... .

Here's a question based on my ignorance. This is an exchange to "trade" a financial product. It is my assumption (possibly wrong) that members/owners of these exchanges are liable for financial losses resulting from failed trading accounts. For example if a derivative trader bets heavily in a position and the trade is massively wrong, the exchange is liable to pay those that profited from the losing trades of the now bankrupt trader.

[MichaelB]

Quote:

Originally Posted by ATby55 -We can afford to lose the $ outright, but issue is can we sleep at nite/live w loss.. we could handle this financially; stomach-wise is the issue -this isn't my field...but Have finance/investment background- so understand the business plan, just can't validate market projections

These comments seem somewhat contradictory. If you can't sleep at night, then you can't afford the loss. If your stomach can't handle it then you can't handle it financially. Projections are part of a business plan, if you understand one then you understand the other.

Quote:

Originally Posted by ATby55 The speed to decide is being explained as the equity seats are running out...when first heard it was 84 of the 100 were taken last week and then 9 more as of friday

This is a classic sales technique, it effectively distracts from completing due diligence.

Quote:

Originally Posted by ATby55 which would be rotten and could delay retirement 1+ Yr

The real question you need to ask yourself is how important is one year of work-free life?

[phil1ben]

I did not get far enough to determine whether it was government approved. It seems you have mentally put yourself in the position that you are damned if you do and damned if you don't.....when no answer will become apparent for years. When you get down to it:

Will you feel worse in the future if:

1. You lose your entire investment, or
2. It does become worth 10-20 times your investment and you passed.

I am assuming that your liability is limited to the initial investment and that there is no possibility that your potential liability exceeds the initial investment. The red lights and yellow lights of caution have already been identified. Whatever you do, good luck.

[Rickt]

Financial investments appeal to two main characteristics of Human nature Viz. "FEAR" and "GREED".

ATby55, with this private investment deal you are experiencing both imho.

FEAR: when you say you are not sure if you can sleep at night after losing your investment.

GREED: when you say that you expect $100k+dividend payments annually and investment will be worth 2M+ after 5 years.

In the end , the stronger emotion will win and you will make your decision accordingly. IMHO, if something sounds too good to be true it usually is.

I would be curious as to how this deal turns out. Best Wishes!

[ATby55]

the exchange wouldn't be liable for losses since another party would be on the other side taking the risk

Liability would be limited to initial investment

1 addtl yr of work is highly valued...work life has lost luster I and count days- although need to establish more concrete plan...guess so this as an easy solution to fast forward...prob too easy


Which path will I feel worse- prob losing it all...

Thank you so much for the feedback and your time!!!

I need to move on.....and get to the office!

Still have call later today w broker...thinking about just canceling

[2B]

Quote:

Originally Posted by ATby55 the exchange wouldn't be liable for losses since another party would be on the other side taking the risk

You missed my point. What if the other party lost more than they could pay and went bankrupt. The person on the winning side of the trade would expect to get their money. Is the exchange liable for unpaid debts of losing traders?

[ATby55]

good question...thx...don't believe so, but am not sure

[Travelwanted]

Quote:

Originally Posted by ATby55 the exchange wouldn't be liable for losses since another party would be on the other side taking the risk Liability would be limited to initial investment 1 addtl yr of work is highly valued...work life has lost luster I and count days- although need to establish more concrete plan...guess so this as an easy solution to fast forward...prob too easy Which path will I feel worse- prob losing it all... Thank you so much for the feedback and your time!!! I need to move on.....and get to the office! Still have call later today w broker...thinking about just canceling

It is your decision but I think many have given good, sound advice.
Big picture: if you don't need to take the risk, DON'T!

[wolf]

OP: Just read your last post. I thought you had already decided to cancel.
" $2million + in 5 years, $100K yearly dividend". On a $100K investment!

Re-Read what the other posters have said. Sounds like you have "gold fever" .

This deal sounds to good to be true. Again, RUN, don't even talk to the Broker. I think if you do, he/she may sway you to gamble your $ away.

Good Luck.

[haha]

I suppose that there are many ways to look at something like this, but not for me. For me, I ask who are these well connected principals who cannot come up with 100*$100,000=$10,000,000 on their own? If it is funded with 50% debt. then they only need to come up with $5 million which should be easy enough for the kind of people who think they can start and run an exchange. In fact, a sole principal should be able to handle it himself. You cannot prove that you will lose your money in this thing, but you don't really sound like a high roller either. People in the ER community usually are risk averse, and also they don't like to gamble with the kind of losses that can seriously stress a marriage. As in boom, it's over.

The only other thing I would like to mention is that this is America, and in America everything is up for grabs- it's jump ball, all the time. I can envision all kinds of scenarios where the lawsuits start flying. In other words, no matter what they say, it is possible that your maximum loss cannot be capped.

Ha

[gcgang]

DWs uncle, very successful, totally self made guy, gave me great advice when I was approached on a O&G deal. He simply said, who are the other investors? Are they oil people, or are they a bunch of doctors, lawyers, etc. And why do they need YOUR money?

I think it is ok to put a small % of your portfolio into "aspirational" investments, having the potential to change your standard of living if successful, but won't compromise your acceptable lifestyle if it goes bust.


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[cnocmmz]

Quote:

Originally Posted by Meadbh Don't do it unless you can afford to lose the money and not miss it.

Agree, treat it as a Vegas trip, that being- only gamble with what you can afford to lose