All Forum Posts by: Ian Ippolito

 Hey Jim, sorry, somehow I see the links that I posted to backup my points were removed, so obviously you couldn't see them. I'm new to the site, and am not sure if it's a bug or if a moderator removed it for some reason.

Trying once again. Here is the link analyzing REITs versus direct real estate (and with links to the academic paper on the liquidity premium): http://www.therealestatecrowdfundingreview.com/#!why-not-a-reit-part-2-publicly-listed/cva

I can see a point to your argument that core real estate is going to be more stable than overall real estate in the REIT index. However, if you look at the differences in the graph, it's fairly severe. It seems to me that that couldn't explain all the differences in the volatility.

Hopefully this time the link will actually "stick".

Ian

 I've also done the lendingclub and averaged between 7-9% over the last 3 1/2 years.

I'll be happy to share my findings with you. The biggest problem with real estate crowdfunding is that the market is so fragmented, and there's no one site that you can go to that will provide enough investments.

So, I'm creating the first comprehensive in-depth reviews of the 60+ sites, including their investor protections, etc.. I'll be posting it in three weeks here: http://www.therealestatecrowdfundingreview.com/#!top-10-site-reviews-and-deeper-views-of-/c1a8m

 Zak, I was really troubled when I read your question and some of the responses. I am an investor like you, who also depends on my portfolio to produce my income. I'm not trying to sell anything or biased toward a particular type of investment.

If you haven't already, you really need to talk to a financial advisor. And make sure you don't pick one that gets paid via commissions on the things you buy. Those advisors will steer you to the highest paying commissions, which are often the worst investments. Instead, make sure that they are a fee-based advisor. That means you pay them a fee for the advice, and you know it's actually good, and not compromised with a conflict of interest.

They will tell you that if you want an investment with no risk, you can invest in US 30 year treasuries and make 3%. Or if you want no risk, put it into a CD ladder, and make around 2.5%.

To return anything higher than that will require risk, and the higher the return, the higher the risk. There are many good investments, including alternative investments like consumer loan crowdfunding (which has been returning me 7-9%).

And there are different types of real estate investments. If you invest in a diversified core real estate portfolio, it can be very safe, and return around 9.6% historically: http://www.therealestatecrowdfundingreview.com/#!why-invest-in-direct-real-estate/c73q

However, with only $1 million, it will be almost impossible to set up a properly diversified portfolio. Most people feel that real estate should not make up more than 10%-20% of a balanced portfolio. So if you only buy a few investments, and one of them goes wrong, it might wipe out all the gains from the rest, and even could put the whole real estate portfolio negative.

I have also searched for available businesses, like you, for two years. I evaluated hundreds, and found every one to be lacking in some fundamental way. I strongly believe that interest rates are so low now, that the good/strong business owners are waiting until they go up to sell. The only ones I could find available, are weak ones that are having severe troubles, and/or are hiding something. Just my two cents.

If you want any further advice, help, feel free to connect with me I'll be happy to.

I'm an investor in Tampa Florida.

In the past I've done some investing as a landlord in residential property, as well as participated in real estate private equity funds. However, my interest in the present is in real estate crowdfunding. The field is really new and has some pretty severe limitations and growing pains to overcome. But if it can, I think in 5 to 6 years it will be a major component of every real estate investor's portfolio.

Looking to collaborate and share with other investors who are doing due diligence on real estate crowdfunding deals.

Thanks,

@Bryan Hancock, I originally thought the same as you and thought sites would be offering real estate crowdfunding to nonaccredited investors soon through A+. Unfortunately, the sites I interviewed said that it's too crippled for them to use: 

so unfortunately, this won't be coming anytime soon. :(

@Jim Groves, I have heard others give the same point as you about REITs being not being as volatile as they seem (in relation to direct real estate). In my opinion, there is a small element of truth to that, but ultimately, it is largely incorrect.

Yes, REITs are valued daily, while direct real estate is not. This is usually why people say REITs look more volatile, but can't truly be compared.

However, there is a way to fairly compare the two. Simply compare REITs on a yearly basis to a direct real estate index that indexes the large, multibillion-dollar funds where the properties are required in their charter to be appraised on a yearly basis. Many of these do exist. For example, the NFI ODCE direct private real estate index.

I did this on my blog posting, and you can see that since 1978, REITs go negative about every five years, while direct real estate only goes negative about every 15 years. The gyrations are much more severe, because they track the severe gyrations of the stock market. Direct real estate is much less volatile and uncorrelated with the stock market.

Also, I've seen many people also quoting the liquidity of REITs as an advantage, and at the same time ignoring the fact that nothing comes for free. Academic papers have found that investors pay a significant liquidity premium on a REIT, that can cost as much as 12 to 20% during certain periods. I talk about their findings, and the repercussions in the blog posting too.