All Forum Posts by: Deion Alaei

@Chris Martin That makes a lot of sense. Thank you for the link and explaining it to me in further detail. I'm understanding more and more the big differences between an REIT and a real estate holding company. Thank you Chris :).

@Duncan Taylor Oh ok, now I understand. Thank you for clearing that up for me. I initially thought you were referring to the operational differences, but now I understand that you were referring more to the process and legal differences. I'm glad we discussed it.

@Joel Owens That makes a lot of sense. I was aware that there are legal differences as far as requirements etc. and its nice to get an answer with a different perspective/aspect of it - it makes it easier for me to understand the real differences. Thank you Joel, I appreciate your response.

Overall - I understand there are differences between the two as far as legally and compliance-wise, but my question was more in regards to what are the operational/strategy differences - a buy/hold investors holds his properties for the cash flow, and so does an REIT for the most part - and my question was more about is there really any difference between the 2 other than legal formalities. Thank you guys for your responses - I appreciate it very sincerely

@Duncan Taylor - are you saying the buy/hold style is different from what an REIT does? reason im asking for clarification on that is because to my understanding, REITs commonly generate their income through holding their properties for the cash flow like buy/hold investors do - one of the laws of an REIT is to have 95 percent of its income derived from dividends, interest, and property income - which indicates a buy/hold strategy - maybe I misinterpreted your words though, which is why I asked for clarification

Hey BP,

I wanted to ask the BP community a question regarding the difference between a real estate holding company and an REIT.

I've researched REITs and what the legal requirements are in order to be classified as one. Having said that, with the exception of a couple of legal formalities, I'm having difficulties seeing the difference between the two.

If you're a buy/hold commercial real estate investor and you acquire your properties via an LLC, is what you're doing that much different from an REIT?

Both structures own income producing real estate, and comprises the vast majority of their holdings - what am I missing?

The only answers I can come up with are things like some REITs are publicly traded, and REITs are required to have 100+ shareholders - aspects that real estate holding companies are not required to have/be.

If anybody can explain to me the differences between the two, I welcome and appreciate your responses/comments.

Thank you.

Patrick D.

thank you for the follow up sir - truth be told, getting a loan was something I was considering, but no it wasn't something I had my mind set on and needed validation for - I can understand though why it may have seemed that way, but honestly, im still trying to weigh my options and determine whats best

I completely understand what you're saying about the field of being an agent is very difficult, especially in the beginning, and thankfully I've been fortunate to have the support/encouragement of my friends, family and the wonderful community here on BP

it sounds cliche, but I sincerely do value all these responses and perspectives from all different types of people on here - you're words are much appreciated and will most definitely be taken into serious consideration

as I said before, im still undecided in regards to method of paying for initial expenses, but im confident that ill be able to figure it out, especially now that I have the opinions and perspectives of all you guys on here. Thanks again :)

Lauren Taylor - Thank you, very sincerely, for your comment - It really is refreshing to get the perspective of someone that's actually been there and actually did get a loan to start their career - I definitely plan to work very hard at it, and definitely plan to succeed - im not gonna try to succeed, I AM gonna succeed - I think saying the word try is planning to fail, that's why I wont use it here - Again, thank you for your comment, and thank you everybody for your comments as well - much appreciation and respect :)

Thank you everybody for the responses so far.

I read each and every last one of them, and for the most part - Patrick and Holly really answered my question directly and in depth - its all good though, I appreciate all the responses I can get as this is an important question to me.

Patrick - I realize the start up costs of being an agent is low - but I wasn't just talking about that set of costs - I was talking about finding a way to pay for the first 6-12 months of those expenses and personal expenses. They say to have 6 months of personal and business expenses saved up first and thats what I was more referring to - and getting a loan was just an alternative idea that crossed my mind that seemed to be less time-consuming than personally saving up money.

Holly - I could not agree more on your views on personal debt - I've been the poster boy for years advocating no debt unless its debt to buy an asset that actually makes you money as opposed to costing you money - having said that, I've slightly entertained the idea of a personal loan because the way I figured - sometimes in the beginning you gotta compromise or do something you generally would be against - nonetheless I get what you're saying though and I completely agree

Hello BP,

I'd like to get opinions from fellow BP members on the following question.

When a person first becomes a real estate agent, they have plenty of costs/expenses: both personal and business expenses.

My question is: in order to be able to pay for costs like marketing, advertising, fees, phone, computer, rent, gas, car - how do you feel about a new real estate agent using debt to be able to pay for those costs and hold them over for a certain period of time until they're able to start cashing commission checks?

More specifically, how do you feel about, for example, a new agent getting a personal loan from his/her bank in order to "finance" the many costs/expenses.

It's something that recently crossed my mind, and it got me to thinking - "if a person did do that, monthly payments would probably be a few hundred dollars a month, which would mean that would really be their only expense, which would mean they'd at the most need a part time job to pay for that as opposed to needing a full time job, therefore having more free time to dedicate to their real estate agent career, therefore better their chances of being successful at it."

Please do feel free to give me your thoughts and opinions on this. Do you think it can be a strategically good idea? do you think its too risky? do you think the quicker accumulation of funds alone makes it worth it? Let me know :)

Thank you @Stephen Doyon , @Bryan L. , and @Susan Gillespie for you guys' responses.

I definitely hope you guys continue to grow your portfolios and real estate businesses. Success and nothing less.

When you guys have some time, please feel free to check out a blog I wrote earlier today - called "Having big dreams - and getting past the nightmares that come with it" - it's the first blog I've ever written and I really wanted to post it as a article so more people would write comments on it.

Thanks again guys :)

Thank you for your responses guys. I really do appreciate it.

I definitely agree that the important thing is the financials of an investment/acquisition and which provides the better returns.

Truth be told, what really sparked my interest about SFRs in the first place recently was when I started seeing big SFR package deals with relatively great cap rates.

I might even consider pursuing those types of deals as well, as opposed to only keeping my eyes on multi tenant single-properties like I usually do.

Thanks again guys - I always appreciate different perspectives.