Suitability Requirements Under the J.O.B.S Act
Is This a Suitable Investment?
Not everyone is a suitable candidate to invest in first mortgage investments from Blackburne & Sons. If you are a California resident, you do not need to be quite as financially strong to invest in some of our fractionalized loans. Please see our California suitability requirements. This particular loan is being offered under the J.O.B.S. Act, so you still need to meet the full suitability requirements below.
Because of a wonderful, recent law change (the JOBS Act, 2009), you can now invest small amounts of money in a bunch of different first trust deeds, even if you live outside of California. In plain English, this means that you can now invest $10,000 in a $200,000 little real estate office building loan in Wichita and $30,000 in a $400,000 office building loan in New Jersey.
The only requirement is that you must be an accredited investor (see below).
“Accredited investor” shall mean any person who comes within any of the following categories:
- Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
- Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
- Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
- Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
- Any natural person whose individual net worth, or joint net worth with that person’s spouse (exclusive of the net value* of the person’s primary residence) exceeds $1,000,000;
- Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
- Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) and
- Any entity in which all of the equity owners are accredited investors.
For the purpose of calculating a person’s individual or joint net worth, the excluded “net value” of a primary residence is the amount, if any, by which the value of the residence exceeds the total debts secured by the residence.
Folks, please don’t misrepresent your suitability. Many retired folks are desperate for more interest income; but the S.E.C. is extremely strict on their suitability requirements. If just one investor lies to us or submits fraudulent net worth or income verification, the S.E.C. could declare the entire offering an illegal security, and George could lose his company. This is serious stuff.
First trust deed / mortgage investments from Blackburne & Sons are not insured by the government in any way. Investing in first trust deed / mortgages involves significant risk. A substantial and prolonged decline in real estate values is possible. Foreclosed properties almost always need substantial renovation, so be sure to maintain plenty of liquidity. Please be sure to read the Risk Factors section of the Offering Circular or Private Placement Memorandum (as applicable) before investing.