Let’s take a look and see what actually happens behind the curtains.
In the case of a REIT (Real Estate Investment Trust) the market makers at Wall Street are between the investor and the deal and they take a healthy premium.
They typically take heavy fees and they often have a specific time-frame from when they enter the deal to when they exit. In this case they may sell into an unfavorable market.
Many investors invest in REIT’s, life insurance companies, pension plans or other large institution type funds. These funds typically invest in real estate, apartment buildings, self-storage and other assets very similar to the assets that are in a normal private placement.
Investors who invest in these funds not only pay higher fees but are also at the mercy of a non-real estate entity making real estate decisions.
These entities are in the business of placing money, not buying real estate. Investors investing in a Private Placement who pick a good competent team will have the comfort of knowing that the property is being acquired from an operational perspective and that the mangers goal is aligned with the investor.
Investing strategically through a Self-Directed IRA and picking a good asset with a great team will not only cut out the middlemen at wall street but will also give them the tax benefits and will limit their investment risk and they can rest assured that the property is being managed by an experienced operator.
The smart money investor normally does not invest in REIT’s but will often go straight to the deal bypassing the shenanigans at Wall Street.
Investing in a private placement in a good solid real estate deal using a Self-Directed IRA can be key to building real wealth and can reduce the risk of having less than a stellar team producing profitable results.
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Guest Article Written By: Dave Zook, The Real Asset Investor®
Dave Zook is a real estate investor, syndicator and financier.
He has raised over $70 Million and has helped investors all over the country get into good solid real estate deals outside of Wall Street through Private Placements.
