Pink Sheet Companies

by Rob
(Minneapolis)

Colm,

I read your book and loved it. After 17 years in the commercial construction industry your book gave me the confidence I needed to pursue real estate development on my own.

Instead of doing small deals, I put together a $212 million dollar real estate portfolio in New York city. All of the buildings are residential apartment buildings and have positive cash flow.


In trying to find the $212 million I approached the owners of a clean pink sheet company and am in the final stages of executing a stock swap in the pink sheet for the deeds, whereas the owner can sell his shares to real estate investors. I get a measurable percentage of stock as my "fee".


Why was this so easy? Have you heard of this transaction before?


Let me know what you think. Thanks for writing your book!

Rob

Hi Rob,


I am very glad my e-book was so helpful to you and it is always good to hear individuals say so; thank you.


I have never had an experience with pink sheet entities and so did a search and found the following on Wikipedia:


The Pink Sheets is not a stock exchange. To be quoted in the Pink Sheets, companies do not need to fulfill any requirements (e.g. filing financial statements with the SEC).


With the exception of foreign issuers, mostly represented by ADRs, the companies quoted in the Pink Sheets tend to be closely held, extremely small, thinly traded, or bankrupt.


Most do not meet the minimum U.S. listing requirements for trading on a stock exchange such as the New York Stock Exchange.


Many of these companies do not file periodic reports or audited financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information about those companies.


For these reasons the SEC views companies listed on Pink Sheets as "among the most risky investments"2 and advises potential investors to heavily research the companies in which they plan to invest. End Quote


When you said that you put together a $212 million portfolio, you did not say what form of legal 'control' you have over the properties i.e Contract to buy or Option to buy?


Aside from that it seems that the pink sheet guy is really going to market these properties for you and his success will be your success.


So if it all comes together for you and his costs don't soak up too much of the profit then your fee will come home to roost.


On the question of how come it seems so easy, I can only say that real estate in the US is going through some very bad times and those times may not have come to an end.


On that basis maybe some apartment block owners are not having to many offers these days and so are willing to deal.


Apartment block owners 'tend' to be long term investors, so their entering into a sales deal with you may be an indication of their nervousness.


The only last observation I would make is did you get control of the properties at a keen competitive price in a falling market and of course, are they well located and maintained?


Obviousely the resale price through pink sheets will be higher, as it involves a sales expenses cost and profit margin.


Hope this helps,


Colm Dillon
www.realestatedevelopmentcoach.com