Private real estate funds

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jason
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Private real estate funds

Post by jason » Tue Sep 06, 2022 2:50 pm

I have multiple friends and relatives who have invested in private real estate funds (totally passive investment). The way it works, the fund gathers many millions (hundreds of millions, typically) of dollars, buys a plot of land, builds an apartment complex, fills it with tenants, then they sell the building, and then they pay the investors. Some variants of this include buying an existing building and renovating it rather than building a new one. From what I have seen, the expected annual returns on this type of investment are 15% to 20%, and I've known people who did incredibly well, getting these types of returns with these types of funds, even during covid (covid reduced the returns a bit but they still did great). Is anyone aware of a way to invest in these types of funds and also diversify fairly well? I'm paranoid of Ponzi schemes so they would need to to be very well-vetted. I would feel comfortable buying something like this through a broker at a big brokerage firm like Morgan Stanley, etc. because I trust them to mostly be able to weed out scams, but I probably would not do this through one of the investing crowdfunding websites, for example, unless they have an amazing vetting process that I don't know about.
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mathjak107
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Re: Private real estate funds

Post by mathjak107 » Tue Sep 06, 2022 3:00 pm

I would stay away .it is to hard to know good from bad .

Decades ago apple reits were hot and sold by David Lerner .

They were very un transparent ….

They paid a 6% dividend. And did so using borrowed money and the money that was supposed to be used to buy other properties.

After numerous law suits they took it public …it has been years and years and years and it still has not surpassed its private buy in price
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Re: Private real estate funds

Post by Kbg » Tue Sep 06, 2022 3:53 pm

Do some Googling and read up on how to pick one. And, there are several reputable places that one can access via online but most of them will also vet you so that they have a sense you understand what you are getting into and have the appropriate financial wealth to participate.

And if they all returned 15-20%, then everyone would be doing this.

Be careful, be informed.

Or buy a REIT or buy the stock "BAM"
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Re: Private real estate funds

Post by vnatale » Tue Sep 06, 2022 4:14 pm

Kbg wrote:
Tue Sep 06, 2022 3:53 pm

Do some Googling and read up on how to pick one. And, there are several reputable places that one can access via online but most of them will also vet you so that they have a sense you understand what you are getting into and have the appropriate financial wealth to participate.

And if they all returned 15-20%, then everyone would be doing this.

Be careful, be informed.

Or buy a REIT or buy the stock "BAM"


Exactly! Just as if there were some pill that could cause you to lose weight we'd only have three overweight people in the country.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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I Shrugged
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Re: Private real estate funds

Post by I Shrugged » Tue Sep 06, 2022 4:50 pm

They do exist. The structure usually allows for the promoters to get out fairly unharmed in the event things go awry. And that's okay as long as you understand the deal. The promoters are the brains and the connections, and you are the investor/speculator.
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Re: Private real estate funds

Post by glennds » Tue Sep 06, 2022 6:34 pm

The opportunity for the kinds of returns you're talking about are going to be in very private funds, the type that are not open to the general public, and selective about the investor pool. The criteria could be based on investment amount, or based on whether the investor is known to the principals, or both.

There's a lot of trust involved, because these types of structures are not regulated, reporting is less formal, and the subscription documents will have been drafted by the fund's attorneys and will probably bake in protections for them and limitations upon you. So I would advise pursuing it only if the fund is being run by people you know and trust.

If everything goes well, you'll be fine, but if things do not go well, you may have very little recourse.
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Re: Private real estate funds

Post by vnatale » Tue Sep 06, 2022 8:32 pm

jason wrote:
Tue Sep 06, 2022 2:50 pm

I have multiple friends and relatives who have invested in private real estate funds (totally passive investment). The way it works, the fund gathers many millions (hundreds of millions, typically) of dollars, buys a plot of land, builds an apartment complex, fills it with tenants, then they sell the building, and then they pay the investors. Some variants of this include buying an existing building and renovating it rather than building a new one. From what I have seen, the expected annual returns on this type of investment are 15% to 20%, and I've known people who did incredibly well, getting these types of returns with these types of funds, even during covid (covid reduced the returns a bit but they still did great). Is anyone aware of a way to invest in these types of funds and also diversify fairly well? I'm paranoid of Ponzi schemes so they would need to to be very well-vetted. I would feel comfortable buying something like this through a broker at a big brokerage firm like Morgan Stanley, etc. because I trust them to mostly be able to weed out scams, but I probably would not do this through one of the investing crowdfunding websites, for example, unless they have an amazing vetting process that I don't know about.


I asked a friend if he was doing something roughly similar to this. His response:

"Very similar.

one big caveat-we do not invest in any offer that we do not personally know a principle investor and management, and a couple other investors. this limits us considerably, but think there is safety doing that.

Need to be an accredited investor if the offering is not SEC approved.

Accredited investor -income greater than $200,000 each of last two years and anticipated that level going forward OR

net worth excluding primary residence of $1M

sometimes we just need to sign a document stating the above

one investment there was an independent company hired and documents were submitted to show qualifications.

We have been fortunate. two brothers from Atlanta who [X & Y] met in college and law school are involved in management. their father, whom we know, is always the largest investor.

The results of individual investments vary, we are satisfied. No investments last two years because markets are currently crazy price wise.



Investing though a large brokerage firm is fine, there are just more layers of expenses, which reduce return on investment
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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jason
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Re: Private real estate funds

Post by jason » Wed Sep 07, 2022 9:53 am

vnatale wrote:
Tue Sep 06, 2022 8:32 pm
jason wrote:
Tue Sep 06, 2022 2:50 pm
I have multiple friends and relatives who have invested in private real estate funds (totally passive investment). The way it works, the fund gathers many millions (hundreds of millions, typically) of dollars, buys a plot of land, builds an apartment complex, fills it with tenants, then they sell the building, and then they pay the investors. Some variants of this include buying an existing building and renovating it rather than building a new one. From what I have seen, the expected annual returns on this type of investment are 15% to 20%, and I've known people who did incredibly well, getting these types of returns with these types of funds, even during covid (covid reduced the returns a bit but they still did great). Is anyone aware of a way to invest in these types of funds and also diversify fairly well? I'm paranoid of Ponzi schemes so they would need to to be very well-vetted. I would feel comfortable buying something like this through a broker at a big brokerage firm like Morgan Stanley, etc. because I trust them to mostly be able to weed out scams, but I probably would not do this through one of the investing crowdfunding websites, for example, unless they have an amazing vetting process that I don't know about.
I asked a friend if he was doing something roughly similar to this. His response:

"Very similar.

one big caveat-we do not invest in any offer that we do not personally know a principle investor and management, and a couple other investors. this limits us considerably, but think there is safety doing that.

Need to be an accredited investor if the offering is not SEC approved.

Accredited investor -income greater than $200,000 each of last two years and anticipated that level going forward OR

net worth excluding primary residence of $1M

sometimes we just need to sign a document stating the above

one investment there was an independent company hired and documents were submitted to show qualifications.

We have been fortunate. two brothers from Atlanta who [X & Y] met in college and law school are involved in management. their father, whom we know, is always the largest investor.

The results of individual investments vary, we are satisfied. No investments last two years because markets are currently crazy price wise.



Investing though a large brokerage firm is fine, there are just more layers of expenses, which reduce return on investment

Thanks. I do qualify for alternative investments. Just not sure how to proceed from here as I don't personally know anyone who runs these types of investments.
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vnatale
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Re: Private real estate funds

Post by vnatale » Wed Sep 07, 2022 12:32 pm

jason wrote:
Wed Sep 07, 2022 9:53 am

vnatale wrote:
Tue Sep 06, 2022 8:32 pm

jason wrote:
Tue Sep 06, 2022 2:50 pm

I have multiple friends and relatives who have invested in private real estate funds (totally passive investment). The way it works, the fund gathers many millions (hundreds of millions, typically) of dollars, buys a plot of land, builds an apartment complex, fills it with tenants, then they sell the building, and then they pay the investors. Some variants of this include buying an existing building and renovating it rather than building a new one. From what I have seen, the expected annual returns on this type of investment are 15% to 20%, and I've known people who did incredibly well, getting these types of returns with these types of funds, even during covid (covid reduced the returns a bit but they still did great). Is anyone aware of a way to invest in these types of funds and also diversify fairly well? I'm paranoid of Ponzi schemes so they would need to to be very well-vetted. I would feel comfortable buying something like this through a broker at a big brokerage firm like Morgan Stanley, etc. because I trust them to mostly be able to weed out scams, but I probably would not do this through one of the investing crowdfunding websites, for example, unless they have an amazing vetting process that I don't know about.


I asked a friend if he was doing something roughly similar to this. His response:

"Very similar.

one big caveat-we do not invest in any offer that we do not personally know a principle investor and management, and a couple other investors. this limits us considerably, but think there is safety doing that.

Need to be an accredited investor if the offering is not SEC approved.

Accredited investor -income greater than $200,000 each of last two years and anticipated that level going forward OR

net worth excluding primary residence of $1M

sometimes we just need to sign a document stating the above

one investment there was an independent company hired and documents were submitted to show qualifications.

We have been fortunate. two brothers from Atlanta who [X & Y] met in college and law school are involved in management. their father, whom we know, is always the largest investor.

The results of individual investments vary, we are satisfied. No investments last two years because markets are currently crazy price wise.



Investing though a large brokerage firm is fine, there are just more layers of expenses, which reduce return on investment



Thanks. I do qualify for alternative investments. Just not sure how to proceed from here as I don't personally know anyone who runs these types of investments.


Yes. As my friend indicated above he learned about them through his two sons who had met people who are involved with them.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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