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    Investing in REIT's

    Hey guys,

    My friend recently mentioned that he invested some of his savings into a REIT plan through Fundrise. They offer shares in packages that have properties in the Midwest, East Coast and West Coast of the United States. I've heard of REIT's but am not too well versed on their pro's and con's. Has anyone owned and/or currently owns stake in a REIT that could provide some insight?

    Thanks,

    Raphael
    Check out the go-to blog for personal and professional development
    thestrongprofessional.com

    #2
    Financial Samurai has written pretty extensively on real estate crowdsourcing. You may want to check out his blog.

    Comment


      #3
      Attention: James

      This post isn't meant to be critical of a member's post, but to point out an opportunity for you to improve your forum. Again you have someone asking a question related to Real Estate. The first response was recommending a non SA blog.

      It is pretty clear to me that a Real Estate forum would become popular here, and not a topic buried in Alternative Investing Strategies. If you could find someone with experience that can provide content and the desire to educate, then in time you wouldn't have members directing people to an outside source when it comes to real estate.

      Comment


        #4
        Pros:

        Earn ongoing dividend income (from rent) AND long-term capital gains (from rising property values).

        Unlike when you buy real property, you can buy into a REIT with only a few thousand dollars.

        Instead of putting all your money in one building, a REIT spreads your money over many buildings and markets.

        Earn income from rental properties without the hassles of tenants, evictions, etc.

        REITs provide diversification since they have different risk-return characteristics than stocks and bonds.

        REITs must pay out at least 90% of their income in dividends, so their dividends are generally higher.

        Cashing out of a REIT is as quick as selling your shares.

        Cons:

        Since only 10% of income goes back into the REIT, growth can be slow.

        Paying someone to manage the properties in your REIT eats into your profits.

        Like mutual funds, you donít control the investment decisions of your REIT.

        If property values drop, your REIT may not make a profit or pay a dividend.

        Source: http://www.timshwed.com/pros-and-con...-trusts-reits/

        Comment


          #5
          Originally posted by StormRichards View Post
          This post isn't meant to be critical of a member's post, but to point out an opportunity for you to improve your forum. Again you have someone asking a question related to Real Estate. The first response was recommending a non SA blog.

          It is pretty clear to me that a Real Estate forum would become popular here, and not a topic buried in Alternative Investing Strategies. If you could find someone with experience that can provide content and the desire to educate, then in time you wouldn't have members directing people to an outside source when it comes to real estate.
          Nothing wrong with recommending a non-SA blog. : )
          james.c.hendrickson@gmail.com
          202.468.6043

          Comment


            #6
            Originally posted by james.hendrickson View Post
            Nothing wrong with recommending a non-SA blog. : )
            I am not saying there is anything wrong with it, but as the admin I think you would rather be a destination for people looking for information.

            Comment


              #7
              Originally posted by StormRichards View Post
              It is pretty clear to me that a Real Estate forum would become popular here, and not a topic buried in Alternative Investing Strategies.
              I agree. I think we ought to start a Real Estate forum. I know if I was looking at this site for real estate info, I'd never think to look in Alternative Investment Strategies.
              Steve

              * Despite the high cost of living, it remains very popular.
              * Why should I pay for my daughter's education when she already knows everything?
              * There are no shortcuts to anywhere worth going.

              Comment


                #8
                REITs are GREAT for INCOME! Not so much for growth. Real estate typically appreciates in the very low single digits annually, including commercial.
                Never underestimate the power of stupid people in large groups.

                -George Carlin

                Comment


                  #9
                  Originally posted by TexasHusker View Post
                  REITs are GREAT for INCOME! Not so much for growth. Real estate typically appreciates in the very low single digits annually, including commercial.
                  What happens when RE bubbles pop? (Obviously the equity goes down, but does income stay relatively the same?)

                  Comment


                    #10
                    Originally posted by thestrongprofessional View Post
                    Hey guys,

                    My friend recently mentioned that he invested some of his savings into a REIT plan through Fundrise. They offer shares in packages that have properties in the Midwest, East Coast and West Coast of the United States. I've heard of REIT's but am not too well versed on their pro's and con's. Has anyone owned and/or currently owns stake in a REIT that could provide some insight?

                    Thanks,

                    Raphael
                    Go over to bogleheads.org and run a search on the subject. You'll have hours of reading.

                    Many people consider REITs a core holding in a balanced portfolio. I used to subscribe to that opinion, but no longer do.
                    seek knowledge, not answers
                    personal finance

                    Comment


                      #11
                      Originally posted by feh View Post
                      Many people consider REITs a core holding in a balanced portfolio. I used to subscribe to that opinion, but no longer do.
                      Why not?

                      Comment


                        #12
                        Originally posted by Nutria View Post
                        Why not?
                        If one holds a total stock market (or S&P 500) fund, these companies are already represented in your holdings. To buy more of that asset class is effectively over-weighting. I'm also quite exposed to the real estate market by virtue of owning a home.

                        Thus, I'm content with the classic 3 fund portfolio (US equities, ex-US equities, and bonds).
                        seek knowledge, not answers
                        personal finance

                        Comment


                          #13
                          Originally posted by Nutria View Post
                          What happens when RE bubbles pop? (Obviously the equity goes down, but does income stay relatively the same?)
                          Both. But there are a variety of different REITs. Some are high flyers with unbelievable dividends, but have equally high flying (and volatile) investments. Novastar was a REIT poster child in the early 2000s, but got smoked badly in the crash, due to their subprime exposure.

                          http://nypost.com/2007/02/23/dreams-...ar-reit-wreck/

                          http://seekingalpha.com/article/4750...se-reit-status

                          The 2008 timeframe might be a good litmus test for selecting a REIT: How did ABC REIT perform in that period and the years immediately after ?
                          Last edited by TexasHusker; 01-18-2017, 05:19 AM.
                          Never underestimate the power of stupid people in large groups.

                          -George Carlin

                          Comment


                            #14
                            Originally posted by TexasHusker View Post
                            Both. But there are a variety of different REITs. Some are high flyers with unbelievable dividends, but have equally high flying (and volatile) investments. Novastar was a REIT poster child in the early 2000s, but got smoked badly in the crash, due to their subprime exposure.

                            http://nypost.com/2007/02/23/dreams-...ar-reit-wreck/

                            http://seekingalpha.com/article/4750...se-reit-status

                            The 2008 timeframe might be a good litmus test for selecting a REIT: How did ABC REIT perform in that period and the years immediately after ?
                            Texas - what if management of the REIT changed since 2008?
                            james.c.hendrickson@gmail.com
                            202.468.6043

                            Comment


                              #15
                              Originally posted by james.hendrickson View Post
                              Texas - what if management of the REIT changed since 2008?
                              REIT holdings don't churn like they do in an equities fund. You can't own 50 shopping centers and then dump them the next day very easily. REITs therefore are more stable by nature generally speaking.

                              The DNA of a REIT - the types of RE they invest in, isn't going to be altered much by a change in mgt, though there are exceptions I am sure.
                              Never underestimate the power of stupid people in large groups.

                              -George Carlin

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