Quote:
Originally Posted by calmloki
Still, I've already lost money putting it with a group rather than self shepherding it.
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I've had similar experiences. I do a lot of hard money lending. No one I've ever lent to has ever missed a payment. But a good buddy of mine went to a conference of people who run hard money "funds" and pretty much all of them had gone belly up at one point or another.
The reason, I believe, is that the incentives are no aligned. Investors get attracted by glitzy headlines like, "earn 10% yields" or in the case of opportunity zones, "Shield your cap gains from taxes." Sounds great right? But then money rushes to these managers, who often get compensated a percentage of assets under management or some upside on the gain. But they never share the downside. Flush with funds, they end up making decisions that could pay off if everything goes great, but that could crash hard if not everything goes great. Heads they win, tails their investors lose.
Funds sounds very compelling....let someone else do the work and I get the benefit. But I've heard story after story of people who ended up losing money by pooling it in real estate investment funds that I personally will not do it even though I get tempted from time to time.