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closetohumping

Passive real estate investing

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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.  

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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.

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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.

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

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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. 

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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.

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