Passive real estate investing

[closetohumping 17781]

Lately I’ve been getting spammed from companies saying I could invest in apartment buildings for as little as 500.00.  Basically you become a part of a large conglomerate to buy multiple units. Anyone familiar with these?   Doesn’t feel like a scam.    Average return of 17% over 5 years which doesn’t really sound great.  

[Dbeasy 15526]

Lately I’ve been getting spammed from companies saying I could invest in apartment buildings for as little as 500.00.  Basically you become a part of a large conglomerate to buy multiple units. Anyone familiar with these?   Doesn’t feel like a scam.    Average return of 17% over 5 years which doesn’t really sound great.  

Those returns are annualized. That would be a very good IRR/ROI. Now whether they can actually consistently achieve that is the real question. Real estate has had a 12 year boom due to dropping interest rates and heavy government spending. It’s unclear what the next five years will look like. In a high inflation environment it might be good. However because of over spending and historically low interest rates , the next five years could be bad for returns too.

[TwiceHorn 31989]

I'm going to guess that this is purchasing "units" in a limited partnership.  Not a whole lot different from owning stock.  But, unlike a publicly traded stock, there is probably a very limited (or no) market to sell the units.  There is probably some kind of buyback agreement with the general partner, but it's not one necessarily designed to get you FMV for the units.

So if things go pear-shaped, very little way to get your money out.

[Skipper 6406]

I wouldn't trust the underwriting of any 'fund' relying on public investors/spam advertising.   

[bernorange 8385]

Just how in the heck did you think Hans Gruber was going to spend his days sitting on the beach while earning 20%?

[RDCanecutter 26853]

If a scam doesn't feel like a scam, that could mean that the scammer is good at scamming.

[tokamak 6685]

Is this not just what a REIT is?

[Kyle 207]

I have participated in RealtyShares. No problems. That platform transferred to intoo, but you can make smaller investments in debt or equity.

[immamac 44200]

This is for people who do not need any liquidity at all and want some type of long term annuity or disbursement on their initial capital.

It's everything that's bad about timeshares, except they pay your annual rent instead of the other way around. 

[Sbbruin 22082]

2 hours ago, Skipper said:

I wouldn't trust the underwriting of any 'fund' relying on public investors/spam advertising.   

Exactly.  If you have to spam randos to get investment, either your investment sucks or you don't have any track record to sell to real investors.

[Nice Guy Eddie 13708]

Since you're a new client, I can't go any higher than 2000 shares.

[Frank Erwin 203]

I have a brother in law involved in one of these, ahem, "investments"  He praises the virtues of passive real estate ownership and exhibits cult-like behaviors.  Of course he was a Corps Turd at aggy  so that is just par for the course. 

Beware of any investment that spends significantly on marketing and "education workshops"  You don't become a successful real estate investor by taking a $1495 weekend seminar at the Ramada Inn.

[Chewbacca 7827]

Success in real estate development is highly dependent on the skill and track record of the developer/operator.  A developer with a strong track record does not have to use crowdfunding to raise money.  Good deals are never making it to your desk unless you can write six/seven/eight figure checks and have done so in the past.  Caveat emptor.

[Incredulity 11861]

15 minutes ago, Frank Erwin said:

You don't become a successful real estate investor by taking a $1495 weekend seminar at the Ramada Inn.

[NeverMarryAStripper 22241]

But you can become rich by giving them

[Sbbruin 22082]

Success in real estate development is highly dependent on the skill and track record of the developer/operator.  A developer with a strong track record does not have to use crowdfunding to raise money.  Good deals are never making it to your desk unless you can write six/seven/eight figure checks and have done so in the past.  Caveat emptor.

Yeah, our company's 50 year track record puts us in a place where the money chases us for placement. We basically tell them "we'll take your money, but don't ask a lot of questions or try to drive decisions. We've got this." Of course we have to have enough of our own skin in it to give them comfort that we run risk as well. And that would be the first question I'd ask- how much of the investment group putting in of their own money before soliciting the public? The smaller that number or percentage, the further and faster I'd run away.

[Nice Guy Eddie 13708]

1 hour ago, Frank Erwin said:

I have a brother in law involved in one of these, ahem, "investments"  He praises the virtues of passive real estate ownership and exhibits cult-like behaviors.  Of course he was a Corps Turd at aggy  so that is just par for the course. 

Beware of any investment that spends significantly on marketing and "education workshops"  You don't become a successful real estate investor by taking a $1495 weekend seminar at the Ramada Inn.

Paying for almost any weekend seminar is a waste of money. I would be surprised if you couldn't find everything you need on youtube if you want to learn more.  I mean legitimate knowledge. I'm sure the seminars you are referencing are also on youtube but only showing you the beautiful models that will join you on your yacht next year once you take their course.

 

[Archer 474]

I’ve invested with a company like this in apartments but it was not solicited, invitation only. You had to be an accredited investor, the minimum investment is high, and you kiss the money goodbye for 5 years. We haven’t sold any of the properties I’ve invested in but the “dividends” have been paid as presented in the financials. I may lose it all or it may double in 5 years only time will tell. 

[Chewbacca 7827]

I’ve invested with a company like this in apartments but it was not solicited, invitation only. You had to be an accredited investor, the minimum investment is high, and you kiss the money goodbye for 5 years. We haven’t sold any of the properties I’ve invested in but the “dividends” have been paid as presented in the financials. I may lose it all or it may double in 5 years only time will tell. 

As long as you are comfortable with the developer, this is the way to do it.

[Archer 474]

Just now, Chewbacca said:

8 minutes ago, Archer said:

I’ve invested with a company like this in apartments but it was not solicited, invitation only. You had to be an accredited investor, the minimum investment is high, and you kiss the money goodbye for 5 years. We haven’t sold any of the properties I’ve invested in but the “dividends” have been paid as presented in the financials. I may lose it all or it may double in 5 years only time will tell. 

As long as you are comfortable with the developer, this is the way to do it.

This group is buying existing B/C class properties in select markets that are not in alignment with the surrounding properties. I am not sure I would invest in a new development; with existing buildings you at least have a built in revenue stream as long as you don’t run them all off. 

[Chewbacca 7827]

This group is buying existing B/C class properties in select markets that are not in alignment with the surrounding properties. I am not sure I would invest in a new development; with existing buildings you at least have a built in revenue stream as long as you don’t run them all off. 

Returns are higher with new development, but a lot more risk.