LinkedIn Reaches Out

The upscale networking site is trying to expand and introduce new products without alienating its influential customer base
by

Aaron Ricadela

Even as upstarts crowd the online hangout field, and youth-focused sites like Facebook pursue a more professional clientele, social network LinkedIn is swiftly adding customers—and profit—by sticking by its well-heeled user base.

The strategy that's swelling LinkedIn's rolodex of professionals by 100,000 a week will be put to the test in coming months as the company rolls out new features and prepares for an international expansion financed by a $12.8 million influx of financing announced Jan. 29. Bessemer Venture Partners put in the lion's share of the round (LinkedIn's third), and European Founders Fund also took a stake. The venture capital companies join existing backers including Sequoia Capital and Greylock Partners.

The In Crowd
LinkedIn has grown to 9 million members—3.6 million of whom log in at least once a quarter—and attracted blue-chip advertisers like BMW, American Express (AXP), and Virgin Atlantic Airways by catering to an affluent demographic. The average LinkedIn user is 39 and makes $139,000 a year. Of the total, 89,000 are chief executive officers, and nearly half a million others occupy another job in the C-suite, LinkedIn says. In addition, companies including Microsoft (MSFT), eBay (EBAY), Target (TGT), and L'Oréal pay $2,000 to $10,000 a month for the ability to search LinkedIn's profiles for job candidates.

Find me at http://www.LinkedIn.com/in/SakaraBlackwell - Let's Connect!

Honolulu's New Chinatown

ThirtyNineHotel is a very cool rooftop...first time last night

Words to live by

You see things; and you say 'Why?'

But I dream things that never were;

and I say 'Why not?'

~George Bernard Shaw

Hawaii Developer's Council Luncheon Today at 12pm

Exchanging Fractional Ownership Interests under Section 1031

Fractional ownership, also known as interval ownership, is becoming an increasingly popular form of property ownership in Hawaii where resort living is in high demand and the cost of property continues to rise. Fractional ownership is an arrangement in which two to six individuals or entities hold shared legal title to a single parcel of real estate or a condominium unit. Each owner owns a fraction of the total ownership. This arrangement allows those who might not otherwise be able to afford the resort lifestyle to do so by sharing the expense of ownership with others.

How does a fractional interest work? Fractional ownership interests are similar to tenancies in common in that the owners receive a deed for a specific undivided interest in the property. Some states, like Hawaii, allow only a limited number of fractional owners. Specifically, Hawaii restricts the number of fractional owners for a single property to six (see Hawaii Revised Statute 514A). Each owner is entitled to exclusive use of the property for only a designated period of time proportional to their ownership interest. For example, if there are six owners, each one is entitled to 1/6 of the total number of days in the year or 60 days a year. The fractional owner receives a deed reflecting their fraction of the total ownership. The developer provides a Fractional Declaration or “Plan” which is a written document outlining the rules governing use and operation of the property by the fractional owners. Fractional owners pay a proportionate share of all expenses according to their ownership. If an owner has a 1/6 share of the property, that owner typically pays 1/6 of the taxes, insurance, repairs and remodeling. Fractional owners also share in the management of the property. Many developers will provide financing to purchasers of fractional interests, but there are also conventional lenders who are now providing loans on fractional ownership interests.

Can these fractional ownership interests qualify as like-kind property in a real estate exchange? The answer is yes. Unlike other forms of interval ownership such as leasehold timeshares, the fractional owner holds direct legal title to the property, reflected by a deed, subject to restrictions on use and possession corresponding to their fractionalized ownership interest. As long as the primary purpose of the fractional ownership is for investment purposes rather than for personal use and enjoyment, the investment should qualify for tax deferral under Section 1031.

There are two authorities that support this proposition: (1) A 1981 PLR allowed 1031 treatment of a vacation home where the taxpayer intended to acquire property for personal enjoyment and as an investment. The IRS held that minor personal use should not render property ineligible for Section 1031 if the relinquished and replacement property are essentially investment property. (2) The Treasury Regulations define qualified property as follows: Unproductive real estate held by one other than a dealer for future use or future realization of the increment in value is “held for investment” and not primarily for sale. Early investment in fractionalized ownership developments means that investors will ultimately reap the benefit of rapid appreciation. Investors can maximize that benefit by considering a tax deferred exchange into other investment real property rather than simply selling their property and paying capital gains tax. This gives an investor the ability to leverage appreciation dollars that would otherwise be spent on taxes.

All investors should consult with their tax advisor when considering use of fractional ownership interests as part of a Section 1031 tax deferred exchange.

Contact Julie Tumbaga, Vice President at JTumbaga@OrexCo1031.com or 808.524.6737

Tennis & Business

I played tennis with Hilton this morning. We played a game called short-court, half-court. I hadn't played with the boys in a week or two for one reason or another. Usually we play doubles with Jeff and Dave on Thursday but the past two weeks it has been on Wednesday...and Wednesday is massage day.

Anyway, I needed the practice so we played this game our tennis pro taught us. I noticed that I played so well. I kept my eye on the ball, put it right where I wanted it and I was able to return almost every shot he had...low, lobs, speedies. This was right off the bat, too. Usually I need a warm-up. Then it hit me (not the tennis ball). The fact that I was focusing on one side of the court, a fairly contained area in comparison to the entire court because of my reach alone, kept me on my game...so to speak.

This is how I feel about our new company Stellar. I feel very focused and contained...and on my game. That lead to me to thinking about doubles...doubles can be tricky...just like business partners. So, in the words of Uncle Bruce, no partners.

Coming Soon...Stellar Worldwide Properties

want access to a super mac-daddy house that you can enjoy on vacation?
what if you had multiple locations to choose from?
somewhere you can entertain your family, friends and business associates.
maybe just you and your honey want to relax.

thought you couldn't afford it?
maybe you could...but didn't want the hassles of maintenance.
this is it.

imagine...beachfront...modern...green...luxury

mailto:thelist@stellarclub.com to be added to the list.

believe me...you want to be on the list.