REITs finally taking a dive??

Spanky said:
They lack liquidity and must be sold to the REIT company itself. Since REIT NAV generally fluctuates less than market price, the lack of liquidity may mitigate volatility in price. However, if you have to sell during a market downturn, the buyer may offer a price significantly discounted from the NAV.
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i would not reccomend doing it unless you plan on holding the full 6 or 7 years until the properties are sold.
 
i can only vouch for the one i use which is apple hospitality , i did look at some others but the fees were rediculous.
 
Thanks. I looked but could find a stock symbol for it. Any idea?
 
there isnt a symbol for it, its un-traded. thats the beauty of it.
 
mathjak107 said:
i would not reccomend doing it unless you plan on holding the full 6 or 7 years until the properties are sold.
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I tend to agree. "un-traded REITS" are illiquid and expensive but do not provide any significant advantages.
 
thats where you are so wrong my friend. we collected 7to 8-1/2% interest for the last 7 years. thats in a world ranging from less than 1% to between 4-5% in bonds cd's mm . only 80% is taxable too as you get to share in the actual depreciation. the properties apple 2 had was just sold off and with the gains we got a total return per year of 17.5 % for 7 years . all with next to no risk a fixed 10.00 per share price if we want to sell early, it just goes in the reinvestment pool and no wild daily swings.

if thats not an advantage for a conservative income producing proxy for a bond on steriods then ill eat my hat.,

we arent talking stock risk or volatilty we are talking quality bond like risk.. all properties are extended stay hiltons and marriotts only

apple vii pays 8-1/2% right now and will be closed when it hits 1 billion. we are about 3/4 of the way there now

unlike buying bonds inflation protection is built in. what happens to real estate during inflation? it usually goes up while bonds tank.

all for a cost of a buy in 0f 6%. like i said try buying commercial real eestate directly and see what the buy in costs you. as a bonus you get the 8-1/2% on the full investment amount not on the amount after the 6% is subtracted too.
 
i was sooooo sceptacal at first too. being from the savy school that said "what me pay a 6% buy in?


on the advice of some other savy investors i took a look and looked to poke holes every where. it was tough because as you know these things arent very transparent but heck i bought worst investments in my life. with cd's and money markets at near record lows of !% i said hell i cant do worse even if i collect 7% for 7 years and get my 10 bucks a share back when sold.


it turned out better than i ever imagined and i bought into the new apple vii which is only about 14 monts old and already owns a nice collection of marroitts and hiltons.


wells reits looked very expensive to me ,so do your homework.
 
well i had a lot worse shoes drop then these. actually i combine them with publically traded reits too. but since public reits are still stocks first they go in my stock bucket. un-listed reits are more like bonds so they go in my income bucket.
 
chinaco said:
I noticed that mine was down.

Oh well, wait for the carnage to finish and pick some up cheap! ;)
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Can you please let me know exactly when that happens. ;)
 
we need to vote in a designated bell ringer
 
mathjak107 said:
thats where you are so wrong my friend. we collected 7to 8-1/2% interest for the last 7 years. thats in a world ranging from less than 1% to between 4-5% in bonds cd's mm . only 80% is taxable too as you get to share in the actual depreciation. the properties apple 2 had was just sold off and with the gains we got a total return per year of 17.5 % for 7 years . all with next to no risk a fixed 10.00 per share price if we want to sell early, it just goes in the reinvestment pool and no wild daily swings.
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17.5% for 7 years is impressive. But Fidelity REIT (FRESX) returns 21% for the last 5 years (I'm too lazy to find the 7 years return).

Can you elaborate on all with next to no risk? I don't understand it at all. How did you come to that conclusion?
 
Wow - this post made me go look at my REIT funds, and sure 'nuff, they are actually negative YTD. I haven't seen something like that in a looooong time.

Funny thing - I hadn't even noticed, because my total portfolio keeps hitting all time highs.

Let them dwindle a bit more IMO. I started buying REIT funds back in 1998, 1999. I think they had a 20% correction one of those years. People hated them back then.

Audrey

P.S. Earlier this year, realizing that my REIT holdings were 8% of my equity allocation rather than the 6% I had intended, I sold the remaining amount I had in CREEX. Good move - it was up 7%+ YTD at the time, and now it's -4%.

Dumb luck!
 
Sam said:
17.5% for 7 years is impressive. But Fidelity REIT (FRESX) returns 21% for the last 5 years (I'm too lazy to find the 7 years return).

Can you elaborate on all with next to no risk? I don't understand it at all. How did you come to that conclusion?
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a publicly traded reit is a stock first and a play on real estate second. its subject to the wild swings every day , its has the potential for huge gains or loses and trades with investor sentiment.

i like to think of an un-listed reit as a kin to a quality corporate bond but on steriods

the un-listed reit sells for a fixed per share price, in my case 11.00 bucks. the interest rate it pays is derived from the income generated by the properities it owns. yes you own directly real bricks and morter and are even given a depreciation write off from the interest.

they strive to maintain the fixed 11.00 share price , if you need to sell early say before the 6-7 year time frame the properties are held before being sold then your shares just go into the dividend re-investment pool serving as a source for those who reinvest at the same 11.00 a share.

at the end of 6-7 years the properties are sold and anything over the value of 11 dollars a share is split. if market conditions arent favorible for a sale they can hold the properties longer but frankly i dont think we ever had a 7 year period real estate didnt appreciate something. i really wasnt expecting anymore than my 8-1/2% but when the properties were just sold it was a nice bonus.

as you see this is a very conservative investment unlike a public reit .

i use them as a bond proxy along with my bonds.
 
Thanks mathjak107. Did you address the next to no risk? Or is the answer already embedded in your reply?

If I read your reply correctly, the risk is there, just like any commercial real estate investment.
 
the low risk is the share price is fixed at a set price. the only risk is if business is bad at the extended stays your interest rate may get cut a little. at the end of 6-7 years the properties are sold. you get your fixed price back plus a seperate bonus check for additional profits.

this is in contrast to publicly traded reits where in 6 weeks you can be down 25%
 
1) So, you're saying that the price you paid for ($11 in this case) is the guaranteed minimum amount you'd get back when you bail out after 6-7 years? Correct? If so, is it written down in the contract?

2) What is the exact time frame? 6 years or 7 years?
 
Sounds like a great alternative to investing in commercial real estate directly. The biggest issue I see is the fact that your not using leverage, which IMO, is one of the most valuable return multipliers when investing in real estate.
 
Sam said:
My Fidelity REIT (FRESX) is behaving almost identically. This is the one fund that I least understand. Kind of going against the common wisdom of "not investing in something you don't understand" :-[
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I'm the "new kid on the block" around here, so I want everyone to know that the "wizard" part of my username has nothing to do with investing !

I hold a significant chunk of FRESX in my 401k, probably way more than I should now that I am retired, so I am "concerned" now that it is down 2% YTD after being up 13% YTD in Feb !

I've looked at the Top 10 holdings of FRESX. All most all are down YTD with Public Storage (PSA) (7th highest holding at 5.3%) down 15% YTD. Looking at the rest of the TOP 10, the companies all own/manage office building, shopping centers, apartment buildings and/or hotels. Nothing to do with single family housing. So I am a bit mystified as why it has dropped so far, so fast. I think long term, it is still a good bet.

Anyone have anymore insight on FRESX ?
 
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