Would You Promote This Product?

[crons79]

I'm excited. 7% guaranteed return and it's "really safe." This is ingenuity at work. Just imagine, he's creating a product that multi-billion dollar insurance and financial companies have not been able to create.

I never said it was something new that I was creating and that the insurance/financial companies could not create it. I said it was in the early stages and that it may morph into something else like using Corporate (Private Placement) Bonds, etc. I already have gotten good response from clients and I know of another company that is very successful at doing something similar. Now, I also wanted to see what agents thought.

Wow, I now know how Ford felt when he created the first car. "Why would people buy that? Its to expensive! Why that horse and buggy over there can do the same thing and trains can carry more than that thing can. This "car" thing will never sell!"

LOL

 

[Crabcake Johnny]

Wow...so you think you're the Henry Ford of the insurance/finance industry? You're destined to be a billionaire.

 

[crons79]

I know. Thanks.

 

[scagnt83]

What was suggested is a scaled down REIT, nothing more.

Unless this product is insured by the SGA or FDIC, and backed by a general account; it is definitely a security.
And who ever sells this product will need to be a RR... and will most likely need a series 7.
The principle of your firm will most likely need a series 24.


I dont even know where to start on all this.....

Clients benefits:
"1. Earns a 7% annual rate of return for 10 years"

Is this contractually guaranteed? I dont think you have said "yes" or "no" to this question yet (its a one word answer).

What happens after year 10? Is that the end of the contract? Are there any Guarantees or "promises" after year 10?


"2. Can receive a monthly check for principal & interest, interest only, or no monthly payments, but doubles their money in 10 years"

The is the same thing as Dividend Options on a REIT.


"3. Investment is secure by real estate"

Same as a REIT.
Except in a REIT the real estate is in a Trust, so you are legally Guaranteed to receive compensation in the event that the corporation fails.
There is a formalized contractually binding liquidation process for the assets within the Trust.
And most importantly, the principles in the corporation do not have the legal ability to misuse assets within the Trust.

"4. Clients may redeem investment after two years, without penalty, due to hardship."

Here is another problem. This implies that if you do not have some type of "hardship", you are not able to redeem your investment... if this is so, how many years until you can redeem your investment?
Is it 10, the same as the 7% guarantee?

A REIT is liquid... preferred stock in a REIT is stable (and the dividend is guaranteed)...


"5. Upon death of investor, beneficiary can decided to continue contract payouts in their name or redeem investment in full."

Again, no different than a REIT if you had purchased preferred stock.


"Agent/Broker benefits:
4% commission on any money invested in our program"

Oh yeah? Is this only on deposit? Are there any trails on this product?

So you are able to pay out an 11% profit after taking yours and paying the very heavy admin fees associated with running and maintaining a Real Estate Trust?

Do you realize that the professionals who have run these for decades are not able to pay out that much to brokers?

But they do pay recurring fees on a yearly basis to brokers (since a real estate trust is mostly comprised of recurring fees..)



"This is really a safe investment geared to investors who want to make more money than banks are currently paying on C.D.'s, Money Market Accounts, and Savings Accounts."

So what is so safe about this? So far, from what you have said, Preferred Stock in a REIT would be a much safer investment...

How exactly are taxes deferred on this product? What section of the IRC does it fall under?

 

[VolAgent]

What was suggested is a scaled down REIT, nothing more.

Unless this product is insured by the SGA or FDIC, and backed by a general account; it is definitely a security.
And who ever sells this product will need to be a RR... and will most likely need a series 7.
The principle of your firm will most likely need a series 24.

So much for that Henry Ford comparison...

I'm glad someone more familiar with REITs chimed in, that is what it felt like to me.

 

[arnguy]

A guarantee is only as good as the party making it. You are opening yourself up to having your a$$ handed to you by suit. BTW, it is "niche" and not "nitch." A simple, one word answer to your query is: NO.

 

[scagnt83]

You really should probably google REITs and learn about that side of the industry.

But to answer your question: without being in a formalized trust, and without a prospectus outlining the company and its underlying investments, I wouldnt touch the product nor give you the time of day to meet and discuss it. (no offense, you might be a great guy)
- - - - - - - - - - - - - - - - - -

I said it was in the early stages and that it may morph into something else like using Corporate (Private Placement) Bonds, etc.

Actually, in retrospect; what your describing is more like a Bond than a REIT. Almost a combination of the two... in a way...

Either way its a security. Either way, being a new investment product, it would be considered a risky venture until your Corporation had proven itself.

 

[bluemarlin08]

If it were really true, you would be overwhelmed with investors. Some of you might remember in late 2008 when one of the annuity companies offer a one year guaranteed rate of 6% and a bailout option free from penalty if the renewal rate dropped below 5. They were swamped with apps, one of my apps took 4 months to get issued.

 

[Crabcake Johnny]

You all are real downers; letting facts get in the way of this guys fantas...I mean dream.

 

[Larry Tew]

You all are real downers; letting facts get in the way of this guys fantas...I mean dream.

I was just thinking the same thing in the "pay off the mortgage" thread!!!