In DRU’s last article they introduced Scott Chaplan, ESQ. Chairman and Managing Director of Del Rey Urban‘s new book, Money Matters: World’s Leading Entrepreneurs Reveal Their Top Tips To Success. Each month they will be releasing excerpts from the book and allow readers the opportunity to discover and learn more about how Scott Chaplan was able to succeed in the real estate market. This weeks excerpt covers Scott’s past and his first successful real estate transaction.
Please continue reading for the first excerpt:
My first real estate acquisition was a three bedroom, two-bathroom condo in Tarzana, California. I was twenty-four (24) years old. Being armed only with tenacity and a lack of fear of the unknown—easy since I didn’t know what I didn’t know. What I didn’t have was credit, enough cash for the down payment, and income. I was in my early 20s and in my second year of law school. I simply didn’t want to pay rent to someone else.
I needed 20 percent down and had only 10 percent. I needed to demonstrate income to obtain the institutional first trust deed. I thought I needed credit. At that juncture, I started thinking creatively (a gift from my dear, recently departed father). I found two law school friends to become tenants in the property I was yet to own. I took that income to the bank, and miraculously, they made me the loan conditioned upon my ability to find the 20 percent down payment. If you try to jump the Grand Canyon on a motorcycle, travel the mile width but miss the smooth landing by only one inch, you still end up a mile down at the bottom. I only had enough cash to clear half the chasm. With more bravado than sense, I pushed the seller, who achieved their exit price, to carry back 10 percent or find someone who would make that loan. I ended up owning that property for nearly 15 years, rented it out, earned a profit, achieved a meaningful write off (at the time), and sold it at a gain. The goal didn’t transcend my capacity but rather my experience; I learned the value of fellowship. Surrounding myself with those more knowledgeable than myself, I learned that “no” is a “yes” in disguise, hiding because the question wasn’t properly presented. (see www.vowofprosperity.com).
Shortly thereafter, I acquired 19 units, 36 units, and then 24 units. In each instance, these acquisitions transcended my personal capacity but never my tenacity. I’ve learned that the winner is always the one who gets up off the mat. That truism has carried me throughout my career. Today, after thousands of units, houses, commercial properties, and developments, it remains the fulcrum in a field where historians often attempt to predict the future—a difficult endeavor. Prudence; market knowledge; fundamentals; the willingness to accept, mitigate risk and intuition; in addition to tenacity and an unwillingness to stop or fail; continue to form my investment and business practices; and have led me and our team at DRU to our current success and inflection point in this changing market.
The Jobs Act
The Jumpstart Our Business Startups (“JOBS”) Act was written in early 2012 and signed into law by President Barack Obama on April 5, 2012. Its intention was to spur investment, largely by unaccredited investors, with drivers including job creation, macro-prosperity domestically, and access to investment opportunities previously unavailable to all but the wealthy. The meaningful provisions of the JOBS Act included the gravamen of Title II of the act relative to the Broker-Deal Exemption, and the ability to have a single-issue sell certain securities to unaccredited investors without limitation (Regulation D, Section 506) up to one million dollars per year. In 2015, this ceiling was raised to 50 million dollars.