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Innovation is Not About Recreating the Wheel

It is about empowering the neglected & underserved market of investors

Real Estate Ownership by way of Cooperative Ownership

The question involves whether this industry is trending today or not, and the answer is no. Real Estate ownership by way of Cooperatives rarely exist to begin with but there is a potential trend that present an opportunity to move away from the traditional way in investing in real estate and tap an untouched niche market commonly ignored by big business.

This type of real estate ownership model entry point can be easy to venture into if it involves a couple members of a cooperative coming to together to invest but it becomes a difficult entry when it involves trying find tens of thousands of other like individuals to become members and invest in the cooperative’s vision. This model involves dealing with people directly and eliminating the traditional bank loan scenario. The involvement of the Securities and Exchange Commission (SEC) in this process makes the entry more of a difficult one because of certain regulations required to be complied with before initiating any type of soliciting of members of the cooperative that will involve the issuance of potential shares of stock. Normally, the bank would be the underwriter in this process and then provide the funding for investment but since the key to the plan is to eliminate the bank’s participation and delegate the underwriting authority directly to the members for funding in exchange stock ownership thereby eliminating cooperative debt and provide an exit strategy via the registration of the shares of stock for the members initial and future investments.

There is an enormous amount of knowledge needed for this industry but the basic is to first know what is a cooperative and once that is accomplished then one can create the base model of what type of cooperative is to be formed, in this case real estate ownership by way of a cooperative. Any additional knowledge will depend on what is to be accomplished and, in this case, we want to know where and how to form a cooperative because every state does not have the same rules regarding formation. Cooperatives are very popular overseas and in the United States their use are limited in certain regions of the country and specific industries such as farming, utilities, food, credit unions and housing cooperatives. Since the niche market is to target everyday people on an individual basis, the cooperative wants to be able to stand out over all others and to do this one will have to gain the knowledge of Securities and Exchange Commission (SEC) and subject itself to its regulations as it involves any type of solicitation to individuals classified as non-accredited investors.

Individuals whether they are consumers or investors want to be informed as it related to this untapped industry’s potential. They only know of the traditional ways of doing things and usually that comes with limitations, and it often discourages participation in opportunities. The unknown element, is the main thing individuals want in this industry and in this case, is the knowledge that they have an opportunity to participate in a cooperative to acquire real estate the non-traditional way. The non-traditional way is the pooling of the cooperative’s member’s funds based on the members involved in the cooperative to acquire cash flowing real estate assets. Individuals want to be informed of these type ways of doing business that spreads and delegates the investment risk among the potential of tens of thousands of other members in the cooperative the same way insurance companies do business. Additionally, being subjected to federal regulations is something that individuals can respect and appreciate because it shows that the cooperative is responsible and wants to be accountable even before the initial solicitation to the individual for an investment. Finally, individuals want to be a part of something at its inception and can benefit from the growth of something that was only afforded to the banks and denied to non-accredited individual investors in the primary markets.

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