Comment by adamhooper | Hacker News Reader

Comment by adamhooper | Hacker News Reader

Parent Full thread

Hooper here, answers below:

1) REIT shares are ownership in the operating company that derives its income from owning real estate. With a single asset LLC you own that specific building and only that building for your investment

2) We are partnering with experts in their respective micro markets that know the ins and outs of their space better than anybody. You get to choose which buildings you invest in and understand the asset specific business plan before you invest. In a REIT, you have no control over how they invest your money, what buildings they buy or how your portfolio is built.

3) If you put all of your money into one deal, there could be concentration risk. However, that's what we're solving. The ability to diversify over multiple buildings with far lower minimum investment amounts

4) Correct, but you're paying 15% load off the top in most cases and are likely going to be subject to stock market volatility as the end goal is usually to convert to public

5) Up for debate :)

Where we're drastically different is in providing access for investors to institutional real estate that they would never have before. A typical deal gets funded by one institution or maybe 5-10 ultra high net worth investors, people don't have access to invest in the best real estate deals. We're changing that.

1. In a REIT, you have an ownership stake in a company that owns real estate. In a RealCrowd LLC, you have an ownership stake in a company that owns real estate. The number of properties owned by the company may differ, but that's no justification for implying that there's a real structural difference in what the investor actually owns.

2. Every REIT will tell you the same thing about their managers.

3. I'm not sure that's solving anything. You're asking your investors to perform the same function as experienced professionals who get paid to manage real estate investments. Might some of your investors do well with this approach? Sure, but there are plenty of individual traders who handily beat hedge fund managers too (not hard these days). But that doesn't mean it's a good idea for the average investor to become an active trader.

4. The goal is not always to go public and not all non-traded REITs are successful in going public even if they want to, but it should be noted that recent liquidity events for non-traded REITs have generally been boons for the investors. Even so, at the end of the day, unless you're buying and managing property on your own, you should feel confident that the people managing your investment are going to do what's best for your investment or you shouldn't invest. Generally speaking, the more options they have, the better. I could easily argue that a vehicle with no option to entertain a public listing is potentially disadvantaged.

5. Fair enough, but calling shares in a REIT a "financially engineered product" is an odd angle for a company targeting investors who are likely to be more sophisticated than average. REITs are not exotic financial instruments so in my humble opinion, this description is over-the-top and doesn't help your positioning.

At the end of the day, both are viable investment alternatives, right? REITs provide liquidity, but you pay for that liquidity through lower returns and less control over those investments.

Our structure provides you the control to choose which assets you invest in, can provide substantially higher cash returns than REIT yields and allows the investor control over where they put their money.

In addition, our structure requires a substantial amount of money co-invested by the real estate operator so their interests are financially aligned to maximize the value of that asset as well. The better the asset performs, the better we all do.

-ah

Reply on news.ycombinator.com