congrats on the winnings op, i hope they aren't crucial in the future.

Thanks, and yeah... I mean, like I said throughout the thread, the $150k was never at any point an amount of money I couldn't afford or wasn't prepared to lose, so it wasn't going to put me in a "crucial" spot

keep us updated OP. I am interested, I think you have a great opportunity, and screw all the haters.

Very cool. Glad to hear you are going to be more than a spectator for this investment.

Best of luck at the tables and in the hotel. Thanks for the update.

Sounds like things are proceeding well. Keep us updated.

I forgot about this and am not rereading at the moment. But we may be saying the same thing even though it sounds opposite.

I am aware of the accredited investor qualification as coming up in the context of the Securities Act of 1933. So I would say that in a sense accredited investor has to do with securities, and more specifically how that term is defined in that act--as opposed to commodities or unregulated instruments (swaps, small businesses, private partnerships). Now one might say that since the accredited investor rules get you exemption from the strictures of the Securities Act, then they get things to not be securities. But I suspect (forgot) that it's more correct to say that accredited investor status relates to exempt securities, not non-securities. (And it may be worth noting also that the exempt offerings are not without oversight--the rules to qualify are rather extensive.)

having said all that, I think I recollect that my question was whether the deal in question here would ever even evoke the Securities Act and require any exemption related to accredited investors. And that would be the case if it did not fit the definition of security in the Act (sec 2?).

I wanted to clarify this a bit further. The original opportunity that he presented me with wasn't to just throw $150k passively at some investment of his he was doing, that was actually an additional option he offered me only if I were interested. He didn't come seeking me out asking me to invest with him.

The original idea was that he felt what he was involved in was perfect/ideal for me considering what I had been telling him for years I was interested in -- finding a way to transition out of poker and learn how to invest my money in a way to generate wealth.

He felt what he was involved in was "getting in first on something major", which he felt getting me involved in as well was an opportunity that would "make me a millionaire and possibly on my way to becoming a billionaire" over time with hard work. Yeah, sounded far fetched to me as well but that's what he said. To take part in the offer, I was going to basically start working with him full time so he could mentor me on what he does. I wouldn't be able to continue playing poker which was the reason I made the other thread since that was kind of a big decision for me.

Have been considering lately just posting full details since I think it would form a much more interesting and relevant discussion, but still haven't since I am unsure of any potential drawbacks to doing so. Unlikely to be many since like I said there has been a few specials on TV about it but my stance was to not even risk posting about it if I wasn't sure. I figured if it's anything like poker where you don't go posting about a "fishy site" to other sharks then I shouldn't mention it, although this seems far different with a lot more barriers to entry.

Not sure, if I did post more details I suppose it would probably be worth a new thread, potentially.

Why not PM the details to a few people you trust and see what they think?

Kind of an interesting curveball thrown into the mix that I'm interested in getting the opinions of people on since I'm not entirely sure how this works since the structure of the deal is set up in the manner that it is. To summarize the deal:

My uncle put up $3M to invest in a hotel where the people he was working with were handling the actual building/construction/managing of the hotel. Once the hotel was up and running he gets paid back his entire $3M with 7% interest. After this loan has been repaid he will then own 60% of the hotel with the others he did business with getting 40% of the hotel. So when I bought in for $150k, I was buying into 5% of his investment company that put up the $3M which would translate to 3% ownership of the hotel once it was up and running.

What has now happened is that the grand opening of the hotel is being delayed a month or two, due to some architectural and design related issues. He said that as a result, the party responsible will be losing 20-25% of their ownership in the 60/40 original deal. So I'm trying to figure out if this means that the original 5% I paid for, that was going to translate to 3% ownership with the 60:40 arrangement, will now mean that of their 40% they lose 20% and the ratio becomes 80:20? If that's the case would that mean that my 5% now will be 4% ownership after the original loan of $150k is repaid?

Or does my % ownership not adjust because the original agreement that I bought into it at was at 5% for 3% ownership?

Another friend I was talking to said that it would go to my Uncle because I basically bought a % from him and am not an original owner. He said for example that if I start a business and give out 20% each to 4 guys and keep 20% for myself... that if one of those guys drops out, it doesn't just automatically re-distribute to 25% per person, the remaining 3 would keep 20% and that guys 20% who dropped out comes back to me which I can then decide what I want to do with it.

I would understand that example perfectly fine but the part that's throwing me off enlies in how this specific deal is structured. I put up 5% but only get 3% because 2% of it goes to the group that is working with us. If those people that are working with us lose some of their %, I would assume I get back a % that's proportional to what I gave away? Is the important distinction the fact that I wasn't an original investor and I essentially bought a % from my uncle? Or would my 5% ownership mean that my 3% should be adjusted when the other party loses their share?

I was thinking of it basically like... 100% financial investment was 95% my uncle, 5% me... and that translated after the loan is repaid to 57% uncle, 3% me, and 40% the other guys to make up the 60/40, then if the other guys lose 20% and it comes back to the 60% side, then 5% of that would go to me?

A simpler way to explain it since I think that was kind of confusing is:

If me and a friend both put up $50k a piece to start a company where we own 50/50 and we decide we need to take on another partner (lets call him Bill) so we both give up 10% of our share so now it would be he and I own 40/40 and the other guy owns 20%, well in that case if that guys 20% gets forfeited it would obviously come back to both of us.

But what if my friend starts the company on his own first for 100k, then he sets up a deal with Bill to give him 20% of his ownership and he keeps 80%, and then i come into the mix and give my friend 50k where i am paying 50% of the capital investment to get 40% now of the company (since 20% is already given away), making it 40/40/20, if that guy loses his 20% in this scenario, does that 20% go directly to my friend or are we still splitting it? the point of interest just seems to be the order in which the deal was put together.

When writing it like this though it looks more like in the 2nd scenario that the 20% would just go to my friend simply as a result of the order in how the deal played out, is this correct?

Wow don't you have anything in writing?

Yeah, I do, so I guess the proper play is to just have my lawyer review the contract and tell me. Just thought maybe it was worth posting in the thread since it was related to the deal. The contract was posted earlier in thread but here it is again, I'm unsure if the last part addresses this recent default in the other guys ownership %.

"PROMISSORY NOTE AND STOCK OPTION

$150,000.00

[Family member's investment corporation], holds mortgages against and stock/shares of [Hotel corporation he created], which owns a hotel and property in [location of Hotel].

For and in consideration of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00), [Family member's corporation] will pay from money it receives from [Hotel] to [Me], principal plus interest on the above sum at a rate of seven percent (7%), with the first installment being due [date], and continuing thereafter each month for sixty (60) consecutive months until paid in full. A copy of the Amortization Schedule is attached hereto.
In addition, said [Me] shall be issued, by [Family member corporation] five percent (5%) of its interest in [Hotel corporation], which will constitute three percent (3%) of the current total outstanding shares of [Hotel corporation].
[Me] shall receive a prorated basis an interest in the property with [Family member corporation] should [Hotel corporation] default in payment and [Family member corporation] shall take control and ownership of the hotel property. Specifically, should [Family member corporation] come to own through foreclosure one hundred percent (100%) of [Hotel corporation]'s properties, then [Me] shall have his interest protected by having a five percent (5%) interest in [Family member's corporation]. holding from [Hotel corporation]
AGREED TO:

____________________________________
[Me]


____________________________________
[Family member]"

As I mentioned in my last post though, it doesn't seem like I would be entitled to getting any of that 20% since I wasn't there in the beginning as a co-investor and invested after the 60/40 deal was already set up, and with the hotel already having begun construction.

Know a man, worth 50+m, RE developer etc. "swindled" cousins, brother, nieces and nephews into the last bit of a project. Real nice guy and raging greedy fu**. He pre sold a line of crap houses they could barely afford for higher than market value. This OP sounds like a rip-off, at the very least a train wreck. If you didn't know this man a day in your life...would it be a good investment, if you answer no or don't know... DON'T DO IT.

This would be a great thread if Newbie would continue to document how it goes.

Did the place open yet?

Well I plan to be posting a lot more once I officially go out there to learn first hand and work with him on a daily basis. I do have a slight update I suppose though:

There were some delays having to do with construction of the hotel that pushed back its opening date a few months and cost money for correcting the mistakes. As a result, one of the people involved in the deal (I believe that's involved with the constructing aspect obv) that made the mistake had to negotiate with my family member on how to rectify the situation.

There was a lot more details I was given, but ultimately what I was told was that he was required to come up with the funds to correct the mistake or have his ownership position bought out. He ended up taking out a loan to pay for the mistakes and I was told by my family member that part of his loan will be used for us to take some money off the table. He said that he will be using some of this money to pay back my investment @ the 7% interest while still allowing me to keep my ownership %.

I was going to ask how exactly this worked and how it was ideal for the other guy, as well as a bunch of other questions -- but then just decided that since that outcome is very ideal for me I'm not going to question it right now and will just wait to get my money repaid back. Will update more later once hotel actually opens, once I'm paid back, or once I go there full time to learn more.

Yeah, I would, although the amount would probably be smaller.

update?

I'm also interested in a update since I've been following this thread from the start. Hope everything turned out ok.

Update?

So much has happened in 2 days... where to begin

Ended up getting paid back my $150k with 7% interest which came out to like 10k profit while keeping the 3% ownership.

The hotel had a lot of setbacks but is nearing the final stages of being built and will probably be moving into the stages of planning out the marketing, hiring of staff, training, etc.

After being paid back my investment he told me about the other investments they are getting involved in and gave me the option of getting involved with those as well. I am pretty sure I will be doing this and things are currently in the process of being structured for that. I have not moved out there full time yet due to some personal matters but will be going soon.

When first creating this thread I was just being on the cautious side by not giving too many details, but now that I have learned a lot more about what it is I'm involved in I'm not too worried about posting the full details since not just any person with money can attempt to get involved -- there are certain barriers in place that one would have to get past to even begin. As a result they would be very late to the game at this point.

But anyway, the hotel is being built in Tanzania of East Africa. This country was chosen on the basis of political stability, economic growth, and business opportunity. He expects Africa to experience continued, enormous economic growth similar to that of Asian countries over the last 40 years like Singapore and south Korea, which at the end of the colonial era were in much the same shape as many African nations. Tanzania followed a more socialist government model not that long ago and have converted to a more capitalistic model so the country is very undeveloped with lots of supposed opportunity.

He feels Africa is an untested and untapped market that people are only just now beginning to learn about and that getting in on the ground floor has enormous long term potential. He says there's only a small group of people that really have any idea what they are doing in Tanzania from a business sense and that by working with him I will get the opportunity to become one of them.

In Tanzania there is huge demand for affordable housing but very, very short supply -- he is interested in being the first person to break that market open, in addition to the hotel chain. This is the second investment he offered me the opportunity to take part in.

There was a show on CNBC that actually related to this that I saw coincidentally shortly after getting back from flying out to Africa on my first trip. The 2:30-5:30 mark relates very much to what he is doing, just in a different country:
http://www.hulu.com/watch/78364/cnbc...sting-frontier

Tanzania has some beautiful tourist spots, but I hope you're not really that glib about the affect of political risk on your long-term return. Good luck though, sounds like it'll be a fun experience at the very least.

Well, when I go there to live full time I'll get a much better sense of the political risk. He feels that it's very small relative to other countries in Africa and that Tanzania is one of the most stable. Already got paid back in full at this point though and poker has been going good so I'm pretty neutral either way.

The hotel though is in a location similar to what was discussed in the video I linked, with no competitors nearby and a great location. So we'll see. As far as the demand for housing, I've definitely seen first hand on my trips there what the demand is like for affordable housing. Seems to be a matter of actually being able to work through the bureaucracy and build the houses at the proper prices. Guess we'll see about that as well.

Definitely felt like a great experience though getting to take trips there both from a tourist standpoint as well as business. Met various government officials, president, ambassador, went to US embassy, etc.

Thank you for the follow up

Sorry for the newb question but how have you been paid back (+profit) before the hotel is even built?