Real Estate as Securities
Your interest in a real estate investment opportunity may begin with a trusted family member, friend, neighbor or business associate who approaches you to talk about some impressive financial gains. An advertisement in a popular newspaper or online
service catches your eye with a promise of guaranteed returns secured by an interest in a piece of real estate.
What you may not realize is that some of these investment opportunities may be unregistered securities or worse yet—scams. Whether a real estate investment is
a security or not is not always easy to determine and depends upon the unique facts and circumstances of the transaction and not on what a promoter calls the investment product.
A general rule of thumb with which to start is that if you as the investor are not in control of the real estate transaction and are expecting a return on your money, the transaction probably involves a security. Because the investment may involve
a chunk of your life savings, consider consulting with an attorney knowledgeable in securities law to provide a legal interpretation for you and evaluate any exemptions claimed by the promoter.