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Interesting commercial real estate investing option...
Old 10-04-2007, 03:21 PM   #1
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Interesting commercial real estate investing option...

I was CCed on an email with this link and thought it was interesting:
Nexregen - Home

I didn't have time to dig very deep but it looks like an interesting hands on way to participate in larger commercial real estate deals with part of your portfolio.

If anyone has time to dig deeper, please post your thoughts and comments.

Regards,

Andy
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Old 10-04-2007, 08:53 PM   #2
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Andy, I don't get any closer to commercial real estate than Vanguard's REIT index fund. When they start to advertise, I figure they are looking to unload it to suckers.
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Old 10-04-2007, 09:13 PM   #3
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Quote:
Originally Posted by Ed_The_Gypsy View Post
Andy, I don't get any closer to commercial real estate than Vanguard's REIT index fund.
Great, thanks for pointing that out. I still have my funds in a savings account (earning 5%). I have not had any time to put together an investment plan and figured that was the safest place to have it for now. I hope to get some time to develop an investment strategy and put together a fitting asset allocation model at some point in the next 6 months.
Quote:
Originally Posted by Ed_The_Gypsy View Post
When they start to advertise, I figure they are looking to unload it to suckers.
Very true. I did not find them via an advertisement but there must be a catch...

I do see some value in what they are doing.
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Old 10-05-2007, 01:10 AM   #4
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Private REITs are usually loaded with huge fee structures and illiquid exits. These "money-back"
guarantees come at a very high price, usually most of the capital appreciation. Check out the
Wells REIT discussions (a private office REIT) on the Fools REIT board (post # 14965 is one)
to get a feel for them.

If you want to invest invest in shopping centers, a public REIT is a much safer bet. KIM is
one of the most respected of all REITs, and FRT and DDR are also very well run.
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Old 10-05-2007, 01:34 AM   #5
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That website's Flash popup is quite annoying, no?

Quote:
Originally Posted by CyclingInvestor View Post
If you want to invest invest in shopping centers, a public REIT is a much safer bet. KIM is one of the most respected of all REITs, and FRT and DDR are also very well run.
Nexregen's playing on the fear and inflexibility of the older real estate investors, the ones who were looking at 8-10% cash-on-cash in the 1980s & 1990s but aren't getting the same bargains today. Some of these people are also sitting on huge cap gains taxes and letting that fear wag the tail of their investment dog.

A local well-regarded realtor has been selling the heck out of his partnership with a similar 1031/TIC company to Hawaii landlords. (He knows he won't be able to sell their rental properties any other way.) They're generally older, some in their 70s or even 80s, who have been mostly neglecting their property investments. They'd see 4-6% as a huge gain over their current 2-3% returns. Ironically the realtor was one of the first customers-- he sunk $200K into an apartment building in July 2005. By New Orleans. But the building was insured (although not the rent receipts) and I suspect that the investment is a rounding error on his total portfolio. He's in his 70s and has already affirmed that he's never retiring.

Nexregen probably offers a structure inferring a "safe" cashflow with the prospect of an occasional cap gain. Not much different than the assurances of an annuity salesman, albeit with a lower-quality guarantee to its duration.

I notice that the $2500 minimum will also bring in a lot of suckers new investors who can't afford down payments, landlord effort, home maintenance expenses, and other barriers to entering the real estate market. They'll certainly get an education, although they may not get rich as quickly as they expect...
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Old 10-05-2007, 10:38 AM   #6
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First off, according to the prospectus, only Texas residents can invest.

Secondly, why would I buy an extremely illiquid REIT, with only one property, when I can buy publicly traded REITs that own many properties across the county?

- Alec
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