CaliforniaMan
Full time employment: Posting here.
I think we are talking about different things - first I'd like to know more about what "products" you are referring to - as would others on this forum so we can avoid them at all cost. What you describe sounds like either an outright scam or a high fee fund of some sort.
What I was referring to in regards to accredited investors were assets like this:
-Direct ownership of real estate such as apartment complex, mobile homes, notes secured by real estate & residential. It can be hard to take down a whole $5M apartment complex yourself, so if the deal is syndicated you can invest in multiple properties in different MSAs - and syndicated deals typically require accreditation.
While I like Vanguard ETFS and use them, it might be a bit extreme to exclude all other vehicles because someone you know lost money in the past, don't you think?
(BTW in 2008 you would have lost 1/2 your money in that ETF, which was highly correlated to the rest of the market)
These were not scams. One was a direct ownership like you mentioned among people who knew each other a long time, but leverage and market timing brought them zero returns over the decade holding. Another was a limited partnership that was too highly leveraged and went to zero. The limited partnership fees also took quite a bite, much more than a REIT. Another sold his business for big profits and invested in real estate before 2008. He thought he was smarter than the market. He was not. One problem is that usually there is little historical results to measure the product and product risk, just sales talk.
I am not saying that there could be some good investments in real estate partnerships, but if there are large returns, they are very likely tied to substantial (and often unseen) risk.
For me personally and for those who do not have the experience and time to study the deal in great detail, I say yes. it is better to entirely exclude these vehicles. The risk is unknown.
On the other hand, if you have been investing in real estate a long time, have lawyers to study the opportunities, and know the risk, then yes, you are one of the individuals who could possibly benefit from this. It is just that I have too often seen them marketed to folks not in this position. They would have done better in some simple Vanguard funds, and not trying to chase a few extra percent a year.