ryanbohle wrote: ↑Thu Jun 10, 2021 4:33 pm
You are making a lot on incorrect assumptions with little information.
To just answer one of the things you said, they have a BBB rating of A+, and my reasoning for investing in a private real estate fund vs a REIT, is I get paid first. I may lose money, they may not be able to continue these returns, of course not, but, if you read the details, they dont make any money off me until I get paid. Thats a pretty sweet deal if you ask me, you wont get that with a publicly traded REIT.
Now I am probably not going to do it because I might as well just shove all my money in VTI. But you are making this out to be something devious or dishonest.
Well, I agree there is little information but please tell us what assumptions were incorrect.
Would the borrowers go with a private fund if they got better terms from a bank? Why would they do this?
A rating of A+ from the BBB has nothing at all to do with the credit worthiness of the business, let alone with the credit worthiness of the borrowers to whom the business is lending. Might as well tell us their average hat size.
What does "they don't make any money until I get paid" mean? Does that refer to their management fee only? Or does it include general and administrative expenses? Do they have any salaried employees? Are they only paying them if there is money left over after the monthly interest payments to investors? What about rent, utilities, taxes?
If it is management fees only, how much of their return comes in the form of management fees, vs compensation to the employees, including those who run the fund? In some deals, the management fees are a small fraction of the expenses.
Not something I would be interested in. If I want to invest in a lender, there are plenty of publicly-held banks. Or sector funds that invest in banks. Or index funds that include banks among the investments. All nice and public, with no accredited investor, high risk characteristics.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either |
We assume that markets are efficient, that prices are right |