Calculating past returns in private real estate fund

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
bogle2013
Posts: 81
Joined: Tue Jan 22, 2013 3:56 pm

Calculating past returns in private real estate fund

Post by bogle2013 » Tue Jul 10, 2018 6:11 pm

I made an investment in a private real estate fund in 11/2011 before i found bogleheads. the manager of the fund talks of the incredible returns we have seen - (we have gotten our principal back plus a small return) - and I asked how his return compared with the market or just the vanguard REIT (which has seen a huge return since 2011).

Please point me in the right direction as to how I could calculate the value if I had put the money into a simple vanguard fund in 2011 as opposed to a private fund. i believe the answer will not please me and will be a great lesson.

Thanks.

User avatar
Rager1
Posts: 885
Joined: Fri Jun 01, 2007 12:03 pm

Re: Calculating past returns in private real estate fund

Post by Rager1 » Tue Jul 10, 2018 6:16 pm

Here's a link to the performance history of Vanguard's REIT Index Fund (VGSIX):

https://investor.vanguard.com/mutual-fu ... ve-returns

Ed

bogle2013
Posts: 81
Joined: Tue Jan 22, 2013 3:56 pm

Re: Calculating past returns in private real estate fund

Post by bogle2013 » Tue Jul 10, 2018 6:33 pm

thanks that helps. any other play that includes dividends and exact dates?

jminv
Posts: 372
Joined: Tue Jan 02, 2018 10:58 pm

Re: Calculating past returns in private real estate fund

Post by jminv » Tue Jul 10, 2018 6:58 pm

Use portfolio visualizer and then compare against your private deal returns. Run a backrest and you can select month to month from when you did the deal to today. You can pick whether you reinvest dividends or not. Portfoliovisualizer.com

Edit: I ran it for you but still check it out. If you invested 100k then and reinvested dividends it would be worth 182k if you invested in vgsix. It would be worth 247.5k if you invested in the s&p500.

If you select ‘display income’ it’ll graph your dividends received in the results.
Last edited by jminv on Tue Jul 10, 2018 7:02 pm, edited 2 times in total.

megabad
Posts: 287
Joined: Fri Jun 01, 2018 4:00 pm

Re: Calculating past returns in private real estate fund

Post by megabad » Tue Jul 10, 2018 6:58 pm

bogle2013 wrote:
Tue Jul 10, 2018 6:33 pm
thanks that helps. any other play that includes dividends and exact dates?
If you call Vanguard and ask for a distribution history, they can provide this (within limits I am sure). My assigned Vanguard rep has done this for me multiple times for other funds. I just get an excel sheet with all the distributions going back several years.

alex_686
Posts: 3605
Joined: Mon Feb 09, 2015 2:39 pm

Re: Calculating past returns in private real estate fund

Post by alex_686 » Tue Jul 10, 2018 8:29 pm

bogle2013 wrote:
Tue Jul 10, 2018 6:11 pm
- and I asked how his return compared with the market or just the vanguard REIT (which has seen a huge return since 2011).
Why Vanguard's REIT (VNQ)? Why not Vanguard's Total Market ETF (VTI)? VTI is only slightly more wrong than VNQ as a benchmark.

I have a mildly favorable view of private real estate funds. The main point in their favor is that they don't act like the like VTI. VNQ is not a good substitute for private real estate because they have greater leverage and liquidity and thus act more like VTI than private real estate.

If you are going to do this right you are going to want a apple to apples compression. Nareit is one of the big index providers both for tradable REITs and private real estate. The problem is that their index are propriety so you need to pay. However, this should not be a problem. If either your broker or your private real estate company is even semi-competent they should be able to access the data and kick out a comparative report.

Then you are going to have to a little more work on the data. Since it is illiquid it should provided better diversification than liquid assets. Maybe. It depends on how the next crisis unfolds.

WanderingDoc
Posts: 800
Joined: Sat Aug 05, 2017 8:21 pm

Re: Calculating past returns in private real estate fund

Post by WanderingDoc » Wed Jul 11, 2018 2:03 am

bogle2013 wrote:
Tue Jul 10, 2018 6:11 pm
I made an investment in a private real estate fund in 11/2011 before i found bogleheads. the manager of the fund talks of the incredible returns we have seen - (we have gotten our principal back plus a small return) - and I asked how his return compared with the market or just the vanguard REIT (which has seen a huge return since 2011).

Please point me in the right direction as to how I could calculate the value if I had put the money into a simple vanguard fund in 2011 as opposed to a private fund. i believe the answer will not please me and will be a great lesson.

Thanks.
REITs do not offer ANY of the tax benefits that pass through to the investor in a private placement real estate syndication. Also, you have to assume dividends reinvested if you did so as well. Compare apples to apples.

I have seen an 16-20% IRR investing in large apartment syndications. Of course this does not include the "paper loss" I write off at the end of the year against my regular income. A REIT will never return 15% or 20% IRR year over the typical 5-10 year course of one of these investments.

These deals (especially the self storage ones) often ultimately get sold off to large REITs.. after investors such as me benefited from the value-add and repositioning strategy, earned a 20-25% annualized return (self storage have had the highest return out of all asset classes that can be syndicated since early 2000s) then sold off to a REIT to "suckers" who are happy with a 4-5% return.
Rent where you live, buy where others pay your mortgage for you. | I'm not looking to get rich quick, I'm not looking to get rich slow (indexing}, I'm looking to get rich.. for sure {real estate}.

Post Reply