'Obamaville' sign posted near homeless camp

Superfreak said:
That is not correct. While they do become more volatile in pricing upon going public, it is incorrect to state that they can no longer make money. The properties still produce income and the valuations of the properties can still rise.
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dude, I know enough people who set up REITs......when they go public the property is converted with the developer taking all the gains obtained from buying them cheap.....they buy at $30k a unit, then value them at $60k a unit when they transfer them to the public offering.....
 
PostmodernProphet said:
dude, I know enough people who set up REITs......when they go public the property is converted with the developer taking all the gains obtained from buying them cheap.....they buy at $30k a unit, then value them at $60k a unit when they transfer them to the public offering.....
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LMAO... really... you know 'people who set up REITS'???

You are obviously confused as to what I am talking about. Your description does not fit a non-traded REIT. What I am referring to comes out at $10 per share. You can invest as little as $1000 in some of them.

It also has NOTHING to do with the developer. These are multi-billion dollar portfolios of commercial property.

You may be referring to a TIC, but even then you would be incorrect to suggest that the properties have little/no upside after they go public. If that were the case... NO ONE WOULD BUY THEM.
 
Topspin said:
Thanks freak I'll check them out. Does S&P or anybody rate these guy's?
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http://www.fa-mag.com/component/content/article/1-features/4107.html?Itemid=55

That is another good article on the pros and cons of the non-traded REITS.

Stanger is mentioned in there and they do a rating on the non-traded REITS.

I don't trust Moody's/Fitch/S&P ratings.... not after the hose job they did on the CDO debt.

Personally, the main things to remember about these....

1) They are ill-liquid... you do NOT want to put any money into them that you might need in the next 5-10 years. (most fall into this holding time frame)

2) You do NOT want to count on being able to redeem early. Treat these as once in... you are in until the liquidity event (either the IPO or the sale of the portfolio)

3) Check the amount of leverage and type of financing each has. For example... Behringer Harvards Multi-family REIT uses 10 year fixed debt (you want fixed... not variable) and it is assumable (meaning whomever buys the properties from BH can simply take over the loans.... which given the interest rate environment today is an added plus). They currently have about 45% leverage.

4) you do not want to invest in anything that has variable rate debt or that has debt coming due in the next several years. If they have either of those, they could run into problems with refinancing or increasing mortgage payments. Both of which are problems as long as the credit market remains tight.
 
Superfreak said:
Your description does not fit a non-traded REIT.
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a "non-traded" REIT is simply a REIT of a tightly controlled group which is not publicly offered....if you are in the right group you can do well.....but, when profits have been maxed the general approach is to offer the REIT publicly....that is when the original investors bail, the property is revalued for far more than it is worth and the public gets shafted by buying in....buying into a publicly offered REIT is simply accepting an invitation to get fleeced.....
 
PostmodernProphet said:
a "non-traded" REIT is simply a REIT of a tightly controlled group which is not publicly offered....if you are in the right group you can do well.....but, when profits have been maxed the general approach is to offer the REIT publicly....that is when the original investors bail, the property is revalued for far more than it is worth and the public gets shafted by buying in....buying into a publicly offered REIT is simply accepting an invitation to get fleeced.....
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Preacher that's basically what freak said 50 posts ago, albeit a lot more eloquently that you have.:321:
 
PostmodernProphet said:
a "non-traded" REIT is simply a REIT of a tightly controlled group which is not publicly offered....if you are in the right group you can do well.....but, when profits have been maxed the general approach is to offer the REIT publicly....that is when the original investors bail, the property is revalued for far more than it is worth and the public gets shafted by buying in....buying into a publicly offered REIT is simply accepting an invitation to get fleeced.....
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What you do is wait for it to go public then chase it up with stops and cash in at the top.... and you don't have to be in any "special" group. Also, the reality is if there was no money to be made when it went public, nobody would buy in.
 
Damocles said:
What you do is wait for it to go public then chase it up with stops and cash in at the top.... and you don't have to be in any "special" group. Also, the reality is if there was no money to be made when it went public, nobody would buy in.
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I was going to say if all the value was created no one would ever buy a share because there would be no value left but that obviously isn't the case. And even though REIT's go public with a certain portfolio they are obviously going to sell some current assets and purchase new assets as ways to grow that portfolio.

He has a point that its great if you can get in at ground zero of a non traded REIT that is going to do well. But there is risk in that as well as there's no guarantee you will get a return on your initial investment if the REIT doesn't perform.
 
Damocles said:
Also, the reality is if there was no money to be made when it went public, nobody would buy in.
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unfortunately that isn't true.....last summer a large REIT came in and bought the largest apartment complex around here....they paid $60k a unit......that's about $10k a unit more than any apartment complex around here sold for even BEFORE the economic turn down.....given the current economic climate it will be ten years before that property is worth what they paid for it......REIT developers are making money off commissions, not the property....
 
PostmodernProphet said:
a "non-traded" REIT is simply a REIT of a tightly controlled group which is not publicly offered....if you are in the right group you can do well.....but, when profits have been maxed the general approach is to offer the REIT publicly....that is when the original investors bail, the property is revalued for far more than it is worth and the public gets shafted by buying in....buying into a publicly offered REIT is simply accepting an invitation to get fleeced.....
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again, you are confusing the REITS... non-traded does not mean non-public.

All of the links I posted are to public non-traded REITS.... there are no limits to the number of investors (other than those imposed due to the total number of shares filed by the fund).

Again... if the pricing procedure were done as you suggest... NO ONE would buy the IPO. You are 100% incorrect with regards to these REITS.

If you are a lawyer in the industry, then I find it hard to believe that you haven't seen these REITS be successful after their IPO. Prologis is a prime example.
 
PostmodernProphet said:
unfortunately that isn't true.....last summer a large REIT came in and bought the largest apartment complex around here....they paid $60k a unit......that's about $10k a unit more than any apartment complex around here sold for even BEFORE the economic turn down.....given the current economic climate it will be ten years before that property is worth what they paid for it......REIT developers are making money off commissions, not the property....
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I'm confused by your term REIT developers. Who is that referring to?

And many people in real estate overpay for property. They are betting on the market to go up. Most people who bought in 2007 look today and say they overpaid for example.
 
cawacko said:
I was going to say if all the value was created no one would ever buy a share because there would be no value left but that obviously isn't the case. And even though REIT's go public with a certain portfolio they are obviously going to sell some current assets and purchase new assets as ways to grow that portfolio.

He has a point that its great if you can get in at ground zero of a non traded REIT that is going to do well. But there is risk in that as well as there's no guarantee you will get a return on your initial investment if the REIT doesn't perform.
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The point is... ANYONE can get into these REITS at 'ground zero' as you stated. You can buy in at $10 a share before they even buy their first property. Or you can wait until they have bought properties and then STILL buy in at $10 per share.

He appears to be confusing a TIC with a REIT. They are not the same investment.

Obviously you are correct in that there is no guarantee of return on investment. Just like every other security out there, there are risks involved. Hell, even CD's have risk (though many people who buy them are unaware of this important fact... amazing the Banks don't tell them the pro's and con's of buying CDs)
 
Freak you and cawacko know 1,000 times more than me on real estate. So I appreciate the cautions.
I have made a few thousand jumping in and out of VNQ when I was just after the hefty div which is now not so hefty.
I think I'm going to quite while I'm ahead as if experts like you guys are weary of them I sure better be. I read a bit today about fannie and freddie coming back to the dole.
I may go some corp bonds for some income.
 
cawacko said:
I'm confused by your term REIT developers. Who is that referring to?

And many people in real estate overpay for property. They are betting on the market to go up. Most people who bought in 2007 look today and say they overpaid for example.
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Look at his post to me a bit ago...

He stated it was 'a tightly controlled group' and 'not available to the public'... neither of those describe the REITs I listed. I am almost certain he is talking about a TIC.
 
Superfreak said:
Look at his post to me a bit ago...

He stated it was 'a tightly controlled group' and 'not available to the public'... neither of those describe the REITs I listed. I am almost certain he is talking about a TIC.
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I would believe you are correct.
 
PostmodernProphet said:
unfortunately that isn't true.....last summer a large REIT came in and bought the largest apartment complex around here....they paid $60k a unit......that's about $10k a unit more than any apartment complex around here sold for even BEFORE the economic turn down.....given the current economic climate it will be ten years before that property is worth what they paid for it......REIT developers are making money off commissions, not the property....
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If they came in during the summer of 2008 and overpaid by that much, then they are idiots. I would bet anything they are not one of the large REITs I mentioned.

Any experienced investor would not have paid that much of a premium in a market so unbelievably weighted towards favoring buyers.
 
Topspin said:
Freak you and cawacko know 1,000 times more than me on real estate. So I appreciate the cautions.
I have made a few thousand jumping in and out of VNQ when I was just after the hefty div which is now not so hefty.
I think I'm going to quite while I'm ahead as if experts like you guys are weary of them I sure better be. I read a bit today about fannie and freddie coming back to the dole.
I may go some corp bonds for some income.
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The thing is Top as you know when a market goes to hell that is when bargins can be found. Look at Sam Zell for instance. He became a billionaire by buying when the market was at its lowest. So if there is a group you know of that has cash and is out looking for bargin opportunities it could be a worthwhile investment.
 
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