Investing through a REIT?

  I was talking to an experienced realtor this evening, and he was trying to get me to create a REIT so I can pool a couple of investors for downpayment on a place, renting it out and selling them later for a nice tidy gain of 16%+.

   I have no experience on a REIT and hate to invest on something that I do not fully understand. But since I am coming in the real estate business I need to understand this more and wondered how you start it and if you got any good result.

  I am in the Los Angeles area so there might be certain rules and regulations on the formation and operation of a REIT.
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September 29 2009 - El Monte
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Answers (2)

REITs can be a great way to attact investors, particular overseas investors because it allows a way for nonresidents to invest in U.S. real property anonymously and with little tax exposure.

The largest obstacle are the setup and compliance costs.  These can be substantial, particularly if the REIT is to be publically traded.  You need a board of directors/trustees and at least 100 shareholders (cannot be closely held).  Also, REITs are subject to many tests in order to maintain their REIT status, such as 95%/75% income tests requiring a minimum amount of income coming from real property, and the 75% asset test.

Feel free to call if you wish to discuss more.

Thank you,

William Hurtt

CIRCULAR 230 DISCLOSURE NOTICE:
Any U.S. federal tax advice included in this communication(including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding U.S. federal tax-related penalties or (ii) promoting, marketing or recommending to another party any tax-related matter addressed herein.
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December 16 2009
Song,

Yes reits are a way to raise money, there are regulations that have to be followed.

Its also easy, very easy to get proformas to show gains, reality is MUCH different.
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October 03 2009
 
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Investing through a REIT?
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Latest answer by William Hurtt
December 16 2009 | 2 answers
  • Asked by Song San
  • In Investing
  • September 29 2009
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