Tax Strategies

FREE Teleseminar on the New Best Thing in Real Estate

Hi Friend

 

Many of you received my prior e-mail regarding Bill Shopoff’s new stock offering for Shopoff Properties Trust. I have included the prior e-mail below to refresh your memory, as well as to cover the required regulatory disclosures. In fact, over 1,000 of you watched his presentation within a few days of the e-mail, so thank you for your follow-up.

 

And speaking of follow-up, I am excited to present you with an opportunity to participate in a teleseminar, Saturday, June 21^st, at 10:00 am MST/PDT to hear more about this opportunity, Bill’s view on the current market, and to address any questions you might have regarding this investment directly with Bill Shopoff, who has made himself available for this call.

 

Here is the dial-in information for the conference call:

 

            Dial-in #: 1.712.432.3000

            Pass-Code (Bridge) #: 406415

 

Please note that the call will only accept the first 200 participants. If you try to join a little later, it’s possible that you will not be able to. We will tape the teleseminar, though. We are also going to try to leave the call open so that you can ask questions of Bill. Please do not use a cell phone or dial in on speaker phone so that we can maintain call quality and allow questions.

 

As preparation for the call, you may want to take the time to view the video, if you have not already done so, which describes the business opportunity. This will allow you some time to formulate your questions and make the most of this opportunity to speak with the founder of a public company.

 

Here is the previous email, so that we keep all the regulatory guys happy:

 

Creating Real Estate Wealth is Not Magic

 

Hi Friends:

 

I’ve had an amazing opportunity for the past year to watch, up close and personal, a friend of mine successfully create a REIT (Real Estate Investment Trust). He is one of the most successful real estate investors I’ve ever met, and it’s an honor to present some of his thoughts regarding real estate investing. By the way, he made over $81 million profit (YES MILLION) in just three years.

 

Creating wealth through real estate investing is not magic and it is not luck. It only takes three things:

 

1. A clear vision.

2. A proven process to bring that vision to reality.

3. An experienced team to make that happen.

 

It’s hard for someone to build the team, communicate the vision and develop the process while still working for a living. That’s why I want to tell you more about Bill’s new venture, Shopoff Properties Trust, which combines these three elements in an innovative new venture, a publicly registered, non-traded real estate investment trust (REIT) that focuses on capital appreciation by investing in undeveloped land and adding value through their entitlement work. I’ll tell you a bit about this company, and later, I’ll tell you how to get more information.

 

Three-Year Profits of over $81 Million

 

I’m proud to say that one of my friends, Bill Shopoff, is the Chairman, President and CEO of Shopoff Properties Trust. In the 3-year period from 2005 – 2007, sales by The Shopoff Group (the sponsor of Shopoff Properties Trust) resulted in profits of $81 million in its private programs that had total investments in the land and the entitlement process of $26 million. Of this $81 million in profits, a portion was retained within the partnership, a portion was reinvested through 1031 Exchanges, and a portion was distributed to the Limited and General Partners.

 

As successful as this Limited Partnership business has been, Bill wanted to find a better way to conduct his business. Cash management is always an issue with Limited Partnerships, and that is especially true with a land-based investment that does not produce steady cash flow and only pays out when a sale occurs. Cash calls are the norm, even in the most successful of land-based LPs, because the funds may be needed over an extended period of time, and not all on day one. Frequently, one partnership would have excess cash while another would need cash. The end result…cash would sit idle in Partnership A while the Limited Partners in Partnership B would have a cash call. It’s a complicated way to have to do business.

 

Bill and I also share a common bond. We only want to pay as much in taxes as is absolutely necessary. We work hard for our money, and would like to retain it and put it to use earning more. Although occasional sales qualified for 1031 Exchanges, the typical sale by The Shopoff Group resulted in a taxable event. That meant that every year the limited partnerships kicked off K-1 forms which showed income that needed to be reported on your personal return.

 

Another thing about Limited Partnerships…you pay taxes in the state where the property is located. Even investors residing in an income tax-free state like Texas got to file and pay California state income taxes on each sale of land in California. And they got to file and pay Hawaii taxes on sales there, and in every other state where a property was sold.

 

A Real Estate Investment Trust (REIT)…A Better Way

 

That’s when Bill, along with his legal and tax advisors, decided to set up a real estate investment trust (REIT). REITs operate under special laws that exempt them from corporate taxation as long as they meet certain provisions, including passing on at least 90% of all annual income to shareholders in the form of dividends. Even better, the entity can be structured so that profits can be plowed back into the REIT through internal 1031 Exchanges…allowing the investor to benefit from the magic of compound interest. This is especially important to investors in Shopoff Properties Trust due to the focus on capital appreciation. With this system, you have more of your money working for you as you eliminate the drag of taxes.

 

There are other tax benefits of a REIT. A simple 1099 will be issued by January 31 matching the actual cash disbursements for prior year…no mysterious Form K1s. REIT shareholders are taxed only in their state of residence, so no more out-of-state tax forms.

 

And, there is one more huge benefit that comes about when you invest your tax-deferred or tax-free retirement funds. Typically, if you invest from one of these plans and there is leverage (loans), your retirement plan will still have to pay a portion of tax in the current year. That’s due to something called unrelated business income tax (UBIT). A REIT is not subject to UBIT!

 

You can invest Roth IRA funds and not ever pay income taxes on any gains. You can even invest traditional IRA funds now and convert to a Roth IRA in 2010, taking advantage of the new tax law that allows everyone, regardless of income, to convert from a traditional to a Roth IRA beginning January 1, 2010, by paying the income taxes on the taxable amount converted.

 

And finally, another huge benefit of a REIT is diversification, an important investment principle. As an investor you don’t have to read through multiple business plans and subscription agreements. You just need to determine if this single investment, in what will be a diversified portfolio of real estate, is consistent with your objectives.

 

When Does the Sponsor Get Paid?

 

If you invest in someone else’s opportunity one question you always want to ask is “When does the sponsor get paid?” I’ve seen offers that have the sponsor receiving as much as 80% of the cash up-front, in fees. That is not the case here.

 

I already told you this is a unique investment. Most REITs invest in cash-flow properties such as apartments, motels, shopping centers, office building or self-storage. Shopoff Properties Trust has a great niche business, investing in underdeveloped and undeveloped real estate assets and preparing them for development by improving them through various facets of the entitlement process, such as land planning and design, engineering and processing of tentative tract maps, and obtaining required environmental approvals. They focus on geographies where they have relationships, and where the cost of land and the difficulty of the entitlement process reward success.

 

Now that is a pretty unique business model; but Shopoff Properties Trust took it even further. They formed an affiliated broker-dealer, Shopoff Securities, Inc., to sell Shopoff Properties Trust on a commission-free basis. That means more of your money goes to work for you.

 

Shopoff Advisors, Inc., an affiliate of Shopoff Properties Trust, will not receive any incentive fees generated by the REIT until the shareholders have received a return of their capital plus a 10% annual, cumulative, non-compounded return. Following those payments, shareholders will then receive 50% of any remaining profits.

 

I am sure you can see why I was pleased to accept Bill’s invitation to join, as one of five outside Directors, the Shopoff Properties Trust Board of Directors. I like being able to see the deals and have the ability to see the inner workings of a consistently successful business. We have a clear vision for Shopoff Properties Trust and we plan to execute the same successful business plan used by The Shopoff Group for the past several years. Additionally, we have the same strong team that produced those outstanding results; a team that has operated through the ups and downs of market cycles; a team that understands the buying opportunities that can exist, especially in a down market.

 

Unique Opportunity to Learn From Bill Shopoff

 

Here is a chance to hear Bill Shopoff, one of the country’s most successful real estate entrepreneurs, describe the unique opportunity offered by this new real estate investment product. Read the Prospectus. Understand the Business Plan.

 

?· Video Presentation – Following is the link to Bill’s presentation.. It is basically everything you would see and hear if you heard him in person. It will take about 30 minutes to watch. You are also free to share it with others if you think they may have interest in this offering.

 

http://www.shopoff.com/spt/reit_download_list.php

If you have difficulty in viewing this video, or to request a Free DVD, please phone 1-877-TSG-REIT (874-7348) or email info@shopoff.com.

 

To learn the criteria for becoming an investor and to see the Investor Suitability

Standards for your state use the following link:

 

http://www.shopoff.com/spt/reit.php#suitability

‘

?· Live Presentations – View the calendar and sign-up on line at

 

http://www.shopoff.com/spt/reit_attend_schedule.php

 

or call or email today to get a schedule of upcoming presentations and to reserve your seat. Call 1-877-TSG-REIT (874-7348) or email info@shopoff.com.

 

Other Things I Need to Tell You

An investment in Shopoff Properties Trust common stock is suitable only for long-term investors looking for capital appreciation growth over a 10-year period, who have adequate financial means without any need for immediate liquidity, and can afford the complete loss of their investment. There are multiple types of risks, including but not limited to:

 

·        Investment – This is a blind pool offering. There is no public market for the common stock, and if you are able to sell your stock, you may have to sell at a substantial discount.

·        Business – Shopoff Properties Trust, Shopoff Advisors, and Shopoff Securities are recently formed companies with no operating histories. The past performance of The Shopoff Group may not be indicative of our future results.

·        Real Estate – Uncertainties in the entitlement process or general market conditions could result in increased costs, longer holding periods, and lower selling prices.

·        Conflicts of Interest – Shopoff Properties Trust will be subject to conflicts of interest arising out of relationships among them, their officers, Shopoff Advisors and its affiliates regarding the acquisition of properties, time management, allocation of resources, compensations, and fees.

·        Dividends – Since their focus will be on land with capital appreciation, rather than income properties, the timing of cash flow is less predictable, and dividends are not guaranteed.

·        Income Taxes – Shopoff Properties Trust intends to qualify as a REIT in 2008; there are tax consequences arising out of the election to be taxed as a REIT if they do not qualify. They may also choose to forego certain investments to maintain their REIT status.

 

Investors in Shopoff Properties Trust should not assume that they will experience returns, if any, comparable to those experienced by investors in any prior real estate programs offered by The Shopoff Group or its affiliates. Prior programs of The Shopoff Group involved the purchase of specific assets. By contrast, Shopoff Properties Trust is a “blind pool” offering in which neither Shopoff Properties Trust nor the investors know what real estate investments will be acquired in the future. In addition there are costs associated with this public offering and with operating a public company which were not incurred by the limited partnerships which participated in The Shopoff Group’s prior programs. Investors purchasing shares of Shopoff Properties Trust will thereby not acquire any ownership interests in any partnership or corporations related to any prior programs of our affiliates.

 

Warmly,

 

Diane Kennedy

 

 

P.S. If after viewing the video you are interested in learning more about investing in Shopoff Properties Trust, please call one of the Registered Representatives at Shopoff Securities, 1-877-TSG-REIT (874-7348) and they will assist you.

 

Even if you’re not interested in investing in a REIT at this time, I urge you to go to the link and view the video. You’ll learn more about what a REIT actually is.

 

Diane’s new book, “Maui Millionaires for Business” is now available at www.amazon.com and www.bandn.com

 

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