Author Topic: Rich Uncles  (Read 12717 times)

Calvawt

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Rich Uncles
« on: November 09, 2014, 10:14:28 AM »
has anyone heard about or invested in rich-uncles.com?  Its a REIT with some commercial properties (Del Tacos and Chase banks) and has a fairly low threshold to get in, but I can't decide if its legit.

dragoncar

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Re: Rich Uncles
« Reply #1 on: November 10, 2014, 03:33:53 PM »
Thought it was interesting.  Huge downside in liquidity, and taxed as ordinary income.  Can't buy this one in tax-advantaged accounts (at least not easily).  Especially wary about this:

Quote
Q: What percentage of the gross proceeds from the sale of shares in Nexregen REIT I will be used for investment?

A: 97% of the gross proceeds from the sale of shares will be used for investment. The remaining 3% of the gross proceeds will pay for organization and offering costs.

marty998

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Re: Rich Uncles
« Reply #2 on: November 10, 2014, 04:31:21 PM »
Thought it was interesting.  Huge downside in liquidity, and taxed as ordinary income.  Can't buy this one in tax-advantaged accounts (at least not easily).  Especially wary about this:

Quote
Q: What percentage of the gross proceeds from the sale of shares in Nexregen REIT I will be used for investment?

A: 97% of the gross proceeds from the sale of shares will be used for investment. The remaining 3% of the gross proceeds will pay for organization and offering costs.

Ah yes, the old chestnut. "Placement fees" lol. Otherwise known as equity arranging.

Poor investment bankers have to earn a crust somehow don't they?

Whether its raising $300m or $3 billion the work is roughly the same. % fees sound so small until you do the maths.

Mighty-Dollar

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Re: Rich Uncles
« Reply #3 on: January 14, 2015, 04:36:40 PM »
This is a non-traded REIT, meaning it is not traded on a stock exchange. NEVER invest in private equity. In 2012 Blue Vault Partners LLC and The University of Texas at Austin McCombs School of Business conducted a study and determined that 71% of non-traded REIT's under performed their benchmarks. If you're really in love with real estate then why not just invest in a real estate ETF like RWR. All you'd pay is a $9.99 brokerage commission. Annual expense ratio is only 0.25%.

One of the core problems with non-traded REITS is the lack of price transparency. Investors are unaware that their broker's commission is being subtracted from your investment vale!

Another problem with non-traded REIT's is the simple question of how do you know what shares of real estate are worth? With real estate, in the absence of an actual independent appraisal, you don't know what it's worth. And ultimately it isn't until you sell real estate property that you know what it's really worth.

Non-traded REITs are also much riskier than "advertised" by the brokers who all too often sell them to senior citizens who think that they are similar to and as safe as bonds. Here's an all too common story about a REIT that dropped 25% in value in one day!!! http://online.wsj.com/article/SB10000872396390444433504577651651830164914.html
Here's some other non-traded REIT disasters...
http://www.nytimes.com/2012/10/23/business/david-lerner-associates-ordered-to-pay-14-million.html?_r=0
http://online.wsj.com/article/SB10001424127887324659404578499023162281746.html?mod=googlenews_wsj
« Last Edit: January 14, 2015, 04:45:22 PM by Mighty-Dollar »