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Old 01-28-2015, 09:42 AM   #1
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REIT

Financial Adviser is pushing me to buy a REIT, specifically CNL Healthcare Properties, which is non-traded.

Aren't non-traded much riskier than traded?

And would advisor be pushing due to huge commision?
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Old 01-28-2015, 09:46 AM   #2
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Financial Adviser is pushing me to buy a REIT, specifically CNL Healthcare Properties, which is non-traded.

Aren't non-traded much riskier than traded?

And would advisor be pushing due to huge commision?
Welcome to the forum.

Answer: Yes to both.
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Old 01-28-2015, 09:52 AM   #3
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Welcome to the forum.

Answer: Yes to both.
+1

Non-traded REITs are right up there with variable annuities.

If you buy one, the managing partner gets to decide when and how much money to give you back. There is little or no transparency. It's next to impossilbe for an individual holder to ever really see what's going on or have any control. Most private REITs I've seen are also for single buildings so diversification is also lost.

Run as fast as possible from this FA.

You can buy highly liquid, publicly traded REITs or a Vanguard REIT fund. This is a better, safer way to put this asset class in your portfolio.
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Old 01-28-2015, 09:56 AM   #4
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I think you would be better off with ETF symbol of RWX.
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Old 01-28-2015, 10:35 AM   #5
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REITs have been hot this last year.

Take a look at the holdings of any REIT fund, some hold a lot of re mortgages. You want companies that hold real estate IMHO. I've owned O for a while but it has gotten rather expensive. Seeking Alpha website has contributors that comment on REITs. Were I you I would read that site for a while, take notes, and then decide.
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Old 01-28-2015, 10:52 AM   #6
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RUN! Get rid of that FA!


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Old 01-28-2015, 10:57 AM   #7
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VNQ is a good choice also. It's the big dog in the REIT/RE sector and has a tiny expense ratio (.10)
Yield ~3.6%.
The FA
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Old 01-28-2015, 10:59 AM   #8
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VNQ was my best performer last year!
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Old 01-28-2015, 11:03 AM   #9
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VNQ was my best performer last year!
Me too. But steel your nerves. There will be some bad years. I hold it long in my IRA.

Even my relatively small holding helped raise my personal rate of return last year.
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Old 01-28-2015, 11:06 AM   #10
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VNQ was my best performer last year!

And for this year too, but it's too early to see if it'll stay that way.
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Old 01-28-2015, 11:08 AM   #11
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REIT

No way. I would do it, but my dad is just cashing a nice gain on one of these broker initiated private reit investments. It just got bought out at a nice profit and he is collecting some big gains from a year or so investment.


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Old 01-28-2015, 11:26 AM   #12
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Financial Adviser is pushing me to buy a REIT, specifically CNL Healthcare Properties, which is non-traded.

Aren't non-traded much riskier than traded?

And would advisor be pushing due to huge commision?
I'd wait for the 2014 annual report, and compare to the previous years. It looks like a decent company, but you need an analysis of their numbers.

You can get healthcare REITs as an ETF, or individual holdings.

It is true that many REITs have done well recently, and hats off to the healthcare REITs especially. When a sector outperforms, though...

There is a place in some portfolios for REIT. I hold VGSLX Vanguard REIT Index Fund Admiral Shares in my Roth-IRA. The return for 2014 was a bit over 30%. How would this compare to your interest from CNL?

If you want to see deep analysis of REITs, check out some of this guy's articles:

Brad Thomas | Seeking Alpha
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Old 01-28-2015, 11:27 AM   #13
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I also own VNQ, which is up 40% last 12 months, and yields 3.6% with an ER of 0.10%. I'm a big advocate of real estate as an alternative holding right now. But I would never buy into a private REIT. Too many cheaper and more liquid ways to participate. My guess is your so-called "financial adviser" will be the primary beneficiary in this deal.
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Old 01-28-2015, 11:56 AM   #14
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I've held IGR for years. The div is good, and, being relatively volatile, just trading in and out with a 10% band has resulted in a lot of the gains.
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Old 01-28-2015, 12:15 PM   #15
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From the Prospectus:
-----------------
We will apply the reduced selling price per share and selling commissions to the incremental shares within the indicated range only. Thus, for example, a total subscription amount of $1,250,000 would result in the purchase of 119,599.173 shares at a weighted average purchase price of $10.452 per share as shown below:

• $500,000 at $10.580 per share = 47,258.979 shares (7% selling commission + 3% marketing support fee);
• $250,000 at $10.474 per share = 23,868.171 shares (6% selling commission + 3% marketing support fee);
• $250,000 at $10.368 per share = 24,111.724 shares (5% selling commission + 3% marketing support fee);
and
• $250,000 at $10.263 per share = 24,360.299 shares (4% selling commission + 3% marketing support fee)
-------------------
10% right off the top for fees and marketing?? I would run from this and fire the FA.
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Old 01-28-2015, 01:23 PM   #16
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I use VNQ for domestic and RWX for international.
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Old 01-28-2015, 01:41 PM   #17
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RUN! Get rid of that FA!
+1
Check the warnings from FINRA (FInancial Industry Regulatory Authority) re: non-traded REITs: Investor Alert - Public Non-Traded REITs?Perform a Careful Review Before Investing - FINRA
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Old 01-28-2015, 03:07 PM   #18
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A pretty good REIT article that contains a few useful factoids.
Among other things, the author recommends using a mutual fund to hold REITs and specifically mentions Vanguard.

10 things you need to know about REITs - MarketWatch
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Old 01-28-2015, 04:30 PM   #19
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A pretty good REIT article that contains a few useful factoids.
Among other things, the author recommends using a mutual fund to hold REITs and specifically mentions Vanguard.

10 things you need to know about REITs - MarketWatch
GOOD short article that brings up many excellent points. Two things hit home for me:
1) Short term volatility. Like I said earlier, I'm standing proud this year for my great personal return, due partially to the REIT exposure. But you should have talked to me in 2008. I darn near threw in the towel, but I'm glad I kept my head.
2) Taxes. Ugh. I find REITs funds can cause tax headaches primarily because of revisions to 1099s. I now keep my REIT funds in my IRA to avoid all the tax madness. And private REITs are worse for tax time.
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Old 01-28-2015, 05:04 PM   #20
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Thanks for all of the great tips!
I left Fidelity in Nov and went with LPL Financial. So far, nothing they have suggested has made any sense. I think it is time I head back to Fidelity, and look into Van Guard some more.
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