How to Start a REIT and Find Investors?

[Account Closed]

Hello, I am interested in how you form an REIT that can be traded on the NYSE? From what I've read you need to start an LLC for the initial property that you purchase, then you need to get 100 investors. I would love to crowdfund a few NNN deals and start an REIT!

[Douglas W. Rink]

Justin,

There is an alternative approach, though you'll need to do your home work.

What you might can do is this:

1. Buy majority of a Pink Sheet shell

2. Form a REIT Delaware Trust Inc.

3. Merge the two companies on share exchange through a reverse merger or triangle merger and redomicile the corp to Delaware.

4. Upgrade the shell to OTC Pink (this is not SEC reporting and lower costs for now about $5,000 year and reports to edgar).

Begin acquiring properties by exchanging Membership interests in an LLC that coverts to common stock of the REIT after one year. (upreit structure)

Build the company up, it will trade over the counter for a few years while you build up the shareholder equity and then PCOAB audit and move to SEC reporting.

Once you reach 5-million in equity, you can uplist to NYSE.

Books to read:

"Real Estate Investment Trusts Handbook" by: Peter M. Fass, Michael E. Shaff, Donald B. Zief.

"Fuqua" by JB Fuqua -My Hero in the south.

Ticker Symbols you can look at that are doing this now (go to www.otcmarkets.com and look at ticker symbol "MRTI" and look at their financial filings.  You will see exactly what to do in this regard. 

Search other small REIT's on the OTC Markets for the smaller ones and see how their growing. The money is made by converting unusual assets into a REIT that has large retained earnings that aren't public now but have share holders, think small railroads, cable TV companies and Billboard companies. In the last few years, Windstream, Lamar and Power REIT have unlocked millions in equity this way.

This is stuff no one will tell you, I hope you do your home work and go for it. You can be creative as you want to get people to contribute property to your REIT. The benefit to them, especially if they have rolled and rolled 1031 exchanges, will be the ability to sell shares as they want over time. It also works great for Real Estate Investors that are ready to retire and want to split shares in an REIT to the Heirs and let them receive a stepped up basis and they can sell the shares over a few years. Think about this, how do you leave a shopping center to three kids? But you can leave them 2,000 shares each of a public REIT they can sell if they want to without the other Heirs and on and on.

Your idea is great, you just have to put the pieces together.  Others are and no one will tell you how, I just told you a poor mans way and once you're NYSE, no one will care.  Good luck.

Kind regards,

-dr

Newton, NC