Post: #1

I've looked through the existing passive income threads but couldn't find any info on this.

I'm interested in using US$100k or so to invest in real estate, e.g. buy a condo, and then have someone else actually run the whole process, i.e. finding a tenant, collect rent, fix stuff when it's broken etc.

So I just want to invest and generate a monthly return without having any kind of involvement whatsoever.

Does anyone know if there are reputable real estate businesses that do this or how one would go about getting more info about this?

Since US$100k won't really buy you jack-shit in most of the western world, I'm guessing it is most likely this would be somewhere like LatAm, EE or Asia.

Does anyone have any experience with this?

Cheers
Z

Post: #2

It sounds like you'd be better off investing in a REIT. You want cash producing real estate assets with no involvement. That's exactly what a REIT does.

https://en.wikipedia.org/wiki/Real_estat...ment_trust

Post: #3

Maybe this is not exactly what you are looking for but there are excellent links on real estate in this thread:

/thread-33309.html

Post: #4

Nookie beat me to it.

You want to invest in a Real Estate Investment Trust.

A lot of them are publicly traded which is a great thing. It means that your investment is highly liquid: you can buy or sell shares very quickly, and as a side benefit the REIT in question is required to publish annual audited financial statements.

If you know how to read them great. If not there's plenty of people on here who can help. I'd offer myself but I know very little about that particular sector...so I can't meaningfully analyze any particular REIT.

Post: #5

REIT's are great. In Canada they are excellent for you TFSA because they aren't taxed like dividends.

Post: #6

REITs come with some danger because they aren't very liquid. Even if the assets held appreciate, even a year later there may not be enough demand on the sell side to make you whole if you need to liquidate for some emergency cash.

Post: #7

(08-15-2015 08:12 AM)zanetti Wrote:  I'm interested in using US$100k or so to invest in real estate, e.g. buy a condo, and then have someone else actually run the whole process, i.e. finding a tenant, collect rent, fix stuff when it's broken etc.

So I just want to invest and generate a monthly return without having any kind of involvement whatsoever.

If you buy house or two in the Midwest in a nice suburb near a metro area you may clear $400-800 a month after the management company's cut should you own it free and clear. You just need:

1. A property on the market which isn't going to eat the rest of your investment to bring up to legal.

2. You need a management company that doesn't suck which can bring in tenants that don't suck. A tremendous portion of this is appealing to the management company with a nice property. Great management companies rent trash properties to trash and nice properties to responsible people. The worse property you offer to the management company the more likely it is the tenants trash it. Even then the tenants might trash it.

3. Even if you find a good management company, capital repairs to keep your rental property habitable come out of your pocket.

On that last point a lot of idealistic "make the world a better place" landlord dreams die in bankruptcy. If you want to be a landlord you need to know what you own, what kind of people can afford it, and more importantly the people who can't rent it. At the very least you want a solid idea of the metro area's demographics to understand where people with money are leaving and where they are moving to. Moving to isn't always as helpful though if they are buying.

Post: #8

(08-15-2015 04:09 PM)BBinger Wrote:  REITs come with some danger because they aren't very liquid. Even if the assets held appreciate, even a year later there may not be enough demand on the sell side to make you whole if you need to liquidate for some emergency cash.

In practice, it depends on the structure of the REIT in question. Publicly traded ones typically have moderate to high liquidity. If they're not publicly traded they are an extremely illiquid investment.

Post: #9

(08-15-2015 05:03 PM)Easy_C Wrote:  

(08-15-2015 04:09 PM)BBinger Wrote:  REITs come with some danger because they aren't very liquid. Even if the assets held appreciate, even a year later there may not be enough demand on the sell side to make you whole if you need to liquidate for some emergency cash.

In practice, it depends on the structure of the REIT in question. Publicly traded ones typically have moderate to high liquidity. If they're not publicly traded they are an extremely illiquid investment.

Liquidity is relative. Compared to most other publicly traded securities REITS will often be far less liquid. They are similar to bonds in that once they have been sold the first time no one wants to hold them second hand.

Post: #10

Here's what I do currently. I'm a realtor, so it's a little easier finding properties, but anyone can do it.

If you have 100k or so, this will work.

Find distressed properties with an after repair value (arv) of 100k or so. Don't use zillow or trulia, they suck. Ask a realtor for comps. Try and buy these properties for cash at 70% of arv minus repairs. So if the property needs 20k in repairs, buy it for no more than 50k. Fix it up ASAP and get a property manager to rent it out. After 6-12 months, go to the bank and get it appraised which should be 100-110k depending on how good you were with your comps. Refinance it with the bank for 70% of the value, and voilà, you now own a cash flowing property and got back all your initial money.

The key to this is being able to find good comps, knowing the repairs, and being able to hold the property for 6-12 months before you can get your money back from the refinance.

Post: #11

Many thanks for all the responses guys!! Has given me a lot of food for thought

Post: #12

I forgot to add that those properties can be used in 1031 tax exchanges also. So you can easily scale these into a 4-plex or more. I think real estate investing is extremely valuable overall.

Post: #13

I vouch for REITs too. Look for Realty Income (O symbol in NYSE). It pays around 5%/year with 11 billion in market capital. If you want passive income investing in real estate, you can't beat that. Plenty of liquidity and much less headaches than leaving you apartment to someone else to manage. You have diversification which is very, very important.

Post: #14

Forgot to mention that REITs by law have to spend at least 90% of its income to pay dividends. So they might charge 10% to manage it. I bet with all those billions they can hire good managers, lawyers, accountants, contractors to keep real estate new and so on. Not so easy when you only have a single apartment.

Post: #15

Hey guys - I wanted to kind of renew this thread and get a discussion going, maybe throw some more ideas around.

I like the idea of an REIT, but it seems to me that the fundamental problem with investing ins REITs is they deny access to the most important quality that makes real estate an attractive investment in the first place - leverage. Maybe you could argue that you may be able to trade REITs on margin (if a broker even allows this, I wouldn't know), but I don't want to trade assets on margin that I have never seen, I don't feel comfortable with that. Also, because REITs typically hold so many properties, I think they are more prone to general RE market upswings / downswings, which may not be as much of an issue with a carefully selected, below-market single home investment, that you know offers a 10%+ CAP rate (apparently these deals exist).

For those of you here that have done REI, what do you look for to analyze the rental / absorption rates in your relative markets? I think I found a market in Cali that I would like to invest in, so just doing a bit of research (don't want to disclose where on the open forum to keep anonymity, but feel free to pm me) - I want to get an estimate of how many other homes are being rented out for a similar price, how long it takes to rent, etc. Is it just best to monitor craigslist or westsiderentals?

Post: #16

Try listening to bigger pockets podcast. Although it is mostly about US real estate markets it gives you a general idea of how things work.

Post: #17

(10-06-2016 04:33 PM)Vinny Wrote:  Try listening to bigger pockets podcast. Although it is mostly about US real estate markets it gives you a general idea of how things work.

Thanks, I have and it is great for motivation and general low-level introduction, but I haven't really been able to get any practical deep level knowledge from there (for example, how to find market data regarding absorption rates / general vacancy levels etc.)

I'm considering becoming more involved on their forums, but there are a lot of can kickers there and endless regurgitation of introductory material, and in general, I prefer to just stick to and post here.

Post: #18

Here´s a good breakdown about REIT´s. Unfortunately he doesn´t cover the leverage in REIT´s:

http://seekingalpha.com/article/4010444-...usts-reits

"For one thing, $100 invested across all REITs in 1971 would have grown to nearly $6,000 in 2015, representing compound annual growth of about 10%:

It´s the third industry which produces the most forbes billionaires.

here are Many Different Types of REITs

While all REITs are similar in many ways, investors need to realize that this sector encompasses a vast array of differing real estate assets:

Office
Industrial
Shopping Center
Malls
Single Family units (rental homes)
Apartments
Medical
Data Centers
Student Housing
Hotels
Triple Net Lease Retail
Manufactured Homes
Storage
Timber
Infrastructure

and mortgage reits.

This can be thought of as "Funds available for distribution" or FAD, and indeed some REITs actually call it that. The difference between AFFO and true free cash flow, as reported by regular corporations, is that FCF also includes growth capex, or the money the company is investing to grow.

First, due to how they structured for tax purposes, remember that REIT dividends are unqualified, meaning they are taxed as regular income, and thus at your top marginal income tax rate. This means that they make great candidates for tax-sheltered accounts such as IRAs. Investors can learn more about which type of IRA is better for dividend-paying stocks here, and a deeper look at how REITs are taxed can be found here.
Fortunately, several types of REITs were not as impacted by the recession. Health care REITs were up 2% in 2007 and recorded a more modest loss of 12% in 2008. They also participated in the market's rebound in 2009 with a 25% return. People continue to need many health care services regardless of how the economy is doing, which can make for more stable occupancy levels and rental rates for these REITs.

Self storage REITs lost 25% in 2007 but held their ground very well in 2008 with a 5% return. It's a pain to move things in and out of storage. Items are usually stored for a reason, and storage companies usually have an easier time raising prices on their customers. This, in turn, makes them reliable tenants with fairly predictable demand."

From another article:

http://seekingalpha.com/article/4010459-...t-revealed

"The only two REITs that I see Trump owns (as per FEC filings) are Crown Castle (NYSE: CCI) and Extra Space (NYSE: EXR). "

Deutsche Bank is one of Donald biggest lender:

"In addition, one of his largest lenders, Deutsche Bank (DB, DBK-DE:XETRA), is apparently close to settling litigation related to mis-selling of mortgage-backed securities during the financial crisis of 2008."



"Grab them by the pussy" DJT

Post: #19

http://www.bloomberg.com/news/articles/2...ket-sinks?

"Shares in many of Brazil’s real-estate investment trusts are still trading below the value of the assets they hold in the funds. "

Post: #20

Does anyone know of REITs that focus only on microhousing? They seem to be getting popular with cities getting more congested and recent grads willing to sacrifice space for a bombass location. That's def where i'm throwing my $$, at least
.

Post: #21

(10-15-2016 12:34 PM)Cyclone Wrote:  Does anyone know of REITs that focus only on microhousing? They seem to be getting popular with cities getting more congested and recent grads willing to sacrifice space for a bombass location. That's def where i'm throwing my $$, at least
.

I'd be interested in this as well, although I think almost all new construction for the past couple of decades has been shoebox condos.

What do you guys think of Artis? At current prices they're yielding almost 9%.

Post: #22

Listen to Rich Dad Poor Dad Real Estate Quadrant section, it gives a general breakdown of how to leverage your money and basic info of borrowing. Some information on where and when to buy.

Post: #23

I like this REIT focused on Latin America:

http://reit.etfscreen.com/price-chart.php?s=LARE

http://www.zerohedge.com/news/2016-10-15...-big-short

Need to research more on this. But if there´s no hidden pitfalls. I believe it´s a good bet.

Might go to Brazil next month. To check how things are on the ground. There are entire resorts being sold for half the price.

Post: #24

(10-16-2016 09:28 AM)bodacious Wrote:  I like this REIT focused on Latin America:

http://reit.etfscreen.com/price-chart.php?s=LARE

http://www.zerohedge.com/news/2016-10-15...-big-short

Need to research more on this. But if there´s no hidden pitfalls. I believe it´s a good bet.

Might go to Brazil next month. To check how things are on the ground. There are entire resorts being sold for half the price.

I dont know much about REITs. What are the fees associated with buying in and having these funds managed?

What is this about entire resorts being sold for half the price?

Post: #25

(10-16-2016 10:35 AM)Ogunn Wrote:  [quote='bodacious' pid='1419367' dateline='1476628134']
I like this REIT focused on Latin America:

http://reit.etfscreen.com/price-chart.php?s=LARE

http://www.zerohedge.com/news/2016-10-15...-big-short

Need to research more on this. But if there´s no hidden pitfalls. I believe it´s a good bet.

Might go to Brazil next month. To check how things are on the ground. There are entire resorts being sold for half the price.

I dont know much about REITs. What are the fees associated with buying in and having these funds managed?

Not an expert. I guess it depends on the REIT.

For Lare:

http://www.tierrafunds.com/fund/

For Realty Income:

http://investors.realtyincome.com/direct...tment-plan

What is this about entire resorts being sold for half the price?

I´m interested in Brazil for a while. But it was too expensive. Been told about a resort near Buzios RJ. The developer run out of funds since it was a megalomaniac project. Anyway I´m not a real estate broker. Neither a fund/money manager. Just manage my own money. Have some contacts in Brazil. Now might be a good time to get in.

The price of offices in Sao Paulo just dropped from the 8th place to 50th place worldwide. It´s an incredible fall.

Problem I see with Brazil is the cost of money. Besides obvious corruption, etc. Interest rates are brutal. Th good thing about leverage is you can get to a level where prices are cheaper and buy in bulk. Where other people can´t reach. What I would like to do is buying a building by crowdfund. Let´s say a building costs 3M with 10 floors. Each floor has 2 apartments. Each apartment will cost 150k. Normally price of each apartment not buying in bulk would be 300k or more. Each investor put 150k. When signing the deed. Each one would get their apartment with a 50% discount from normal prices. Not all apartments would have the same price. Since ground floor and penthouse are different. Without any kind of work to be done.

If you just want to look into Brazilian prices. Here are some websites:

http://www.zapimoveis.com.br/
http://www.olx.com.br/
http://www.remax.com.br/default.aspx