REIT thread refreshed perhaps

[Diane Menke]

Folks, someone else recently posited the idea of starting a small scale REIT. We have been discussing the same idea here. There must be a way to do it I just have not figured it out yet.

My ideal set up is a bunch of people (less than 10) put cash into a pool that our mini REIT would tap to buy properties, probably REO's that we would flip. Time frame 24-36 months max. Still need to ID a trigger to sell/close out and pay out. Minimal cash needed for the pool is $300K. $500K is better.

Mind you, this was not a hammered out plan just a "what if" we ran by some folks in casual conversation, who said they really wanted to invest in RE.

Here are some "issues" we saw right away with these 'investors".

1. Folks would say they were interested but when we dug further, what they really wanted to see was a garanteed % return and they might like to pull out at any time.

2. They wanted to get very excited about a particular property. This usually meant they were emotional and very turned on with renovation ideas. Not the balance sheet. They were looking at the wrong thing.

3. SEC rules state that you should have a qualified investor. Clearly these small time investors were not SEC qualified.

4. In PA its illegal for me to advertise looking for investors.

5. My family and close friends are not good sources for investors.

6. I do not work well in committees. I like being the person in control. Many of these small time "investors" wanted to be noisy "partners".

OK so whats the best entity to use for my mini REIT and how do I attract real investors without breaking the law?

I'm sure the mini REIT is a model that would make money for everyone. I'm just having a rough time getting it off the ground.

Thanks all

Diane