Richuncles.com [non-traded REIT]?

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JamesSFO
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Richuncles.com [non-traded REIT]?

Post by JamesSFO »

So these guys have been advertising heavily in the SF Bay Area of late https://www.richuncles.com/.

Seems like a privately held individual REIT; but the advertising makes it sounds like it is some sort of Prosper/Lending Tree where you get to co-invest with experts. I suppose both things could be true, but it feels off and the "catchy" name seems fake.

Anyone seen analysis of the company? Blog posts about actual results/experiences?
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Re: Richuncles.com?

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general investing).

See the FAQ page: Rich Uncles: Real Estate Investing for Everyone

- 3% goes to expenses
- The details of "How it Works" needs a login to view. That's a big red flag.
- It's only available in California

Would this be classified as private equity? If so, it was one of the questions brought up at the Bogleheads conference. The consensus was to stay far, far away.
JamesSFO wrote:... the advertising makes it sounds like it is some sort of Prosper/Lending Tree where you get to co-invest with experts....
The wiki has some background info: Peer-to-peer lending
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Re: Richuncles.com?

Post by JamesSFO »

Thanks LadyGeek!
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Re: Richuncles.com?

Post by Rob5TCP »

Non traded REITS don't have a great record. And not just because of the high commissions.
When you sell out in your REIT, THEY determine the value not the market.
If you wish to sell early; you have to go through THEIR operation REITBid.com.

You have limited liquidity and poor transparency (you basically take their value for the shares, not the market's). Since their REITbid.com
is very limited, I would not expect great prices to be realized.

I will stick with public REIT (fund) anytime.
bowtie
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Re: Richuncles.com?

Post by bowtie »

It's a terrible sounding title, don't you think? I don't know why I should be inclined to trust that even just based on poor taste in the title!
Generally anyone or anything that keeps up that incessant advertising seems a bit obnoxious ... although some ads are representing good companies and offers...
vested1
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Re: Richuncles.com?

Post by vested1 »

One particular talk show host on KGO, the largest AM radio station in the area, pushes Rich Uncles while using scare tactics about markets crashing and financial doomsday scenarios. These scare tactics are easily recognizable on other advertisements aired on the station that offer a guaranteed tax free 12% gain on investments. It seems there are no checks and balances when it comes to "free speech" that turns out to be anything but free for the victims.

It would be refreshing to see a radio station as large as KGO take the high road and refuse to air commercials that have such blatantly false claims. Too many place their trust not only in the station, but in the talk show hosts who help pedal inappropriate investments.
Dulocracy
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Re: Richuncles.com?

Post by Dulocracy »

I would be hesitant to invest in a website with the name rich uncles. First, it sounds like a dating website for creepy old guys to find young, misguided females in need. Second, if they are taking your money, who is the rich uncle?
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
logical synapse
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Re: Richuncles.com?

Post by logical synapse »

Does anyone here watch the show American Greed? This reminds me of the kind of thing you would see on there, caveat emptor.
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Re: Richuncles.com?

Post by KyleAAA »

Seems like the large majority of their properties are tied to a single tenant. And they don't even have good tacos. I'd like to see a lot more diversification before I would consider investing. The testimonials look like something out of a late-night infomercial.

https://www.richuncles.com/properties
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Re: Richuncles.com?

Post by barnaclebob »

There was someone who brought a real estate version of lending club onto Shark Tank. He got properly destroyed by Mark Cuban. It may not be an outright scam but you can bet its not a good investment for many people. That was actually Mark Cubans argument, that normal people have no business investing in individual real estate deals based on a few paragraphs on a website.
Last edited by barnaclebob on Mon Oct 19, 2015 11:21 am, edited 1 time in total.
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alec
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Re: Richuncles.com?

Post by alec »

Fyi - looks like they filed a registration statement with SEC.

http://www.sec.gov/cgi-bin/browse-edgar ... e&count=40
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Re: Richuncles.com?

Post by TNL »

Dulocracy wrote:I would be hesitant to invest in a website with the name rich uncles. First, it sounds like a dating website for creepy old guys to find young, misguided females in need. Second, if they are taking your money, who is the rich uncle?
+1. I thought the same thing. Gross.
Mingus
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Re: Richuncles.com?

Post by Mingus »

TNL wrote:
Dulocracy wrote:I would be hesitant to invest in a website with the name rich uncles. First, it sounds like a dating website for creepy old guys to find young, misguided females in need. Second, if they are taking your money, who is the rich uncle?
+1. I thought the same thing. Gross.
I agree.

www.wealthyaunts.com would be more appropriate.
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Re: Richuncles.com?

Post by Dulocracy »

Mingus wrote:
TNL wrote:
Dulocracy wrote:I would be hesitant to invest in a website with the name rich uncles. First, it sounds like a dating website for creepy old guys to find young, misguided females in need. Second, if they are taking your money, who is the rich uncle?
+1. I thought the same thing. Gross.
I agree.

http://www.wealthyaunts.com would be more appropriate.
No. Now I have a thought of the Golden Girls flashing dollar bills at guys on a college campus. Sugardaddies or sugarmommas are also right out.

Investingpartners or realestateteam would work a lot better for names. Not sure if any of the above are real or taken, and I am not checking at work.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: Richuncles.com?

Post by Toons »

For Me,
After digging through website(and beyond)
Pass,caveat emptor :happy
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JoMoney
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Re: Richuncles.com?

Post by JoMoney »

I think this site is a slightly different idea, but for some reason I'm reminded of the Shark Tank with the guy who was trying to fund a startup to sell real estate development projects through crowd-funding?
https://www.youtube.com/watch?v=tJOV-nhir-I
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JamesSFO
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Re: Richuncles.com?

Post by JamesSFO »

Thanks again all for the thoughts, to be clear I wasn't planning to invest before but I certainly won't now.
lumberingc
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Re: Richuncles.com?

Post by lumberingc »

I hear a lot of Advertisements for this in Southern California as well. It sounds very shady to me.
Valuethinker
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Re: Richuncles.com [non-traded REIT]?

Post by Valuethinker »

JamesSFO wrote:So these guys have been advertising heavily in the SF Bay Area of late https://www.richuncles.com/.

Seems like a privately held individual REIT; but the advertising makes it sounds like it is some sort of Prosper/Lending Tree where you get to co-invest with experts. I suppose both things could be true, but it feels off and the "catchy" name seems fake.

Anyone seen analysis of the company? Blog posts about actual results/experiences?
Heavy advertisements and "coinvest with the experts".

Structure which is opaque, limited liquidity, your access to assets is basically controlled by the manager.

Uggh.
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Re: Richuncles.com?

Post by Valuethinker »

barnaclebob wrote:There was someone who brought a real estate version of lending club onto Shark Tank. He got properly destroyed by Mark Cuban. It may not be an outright scam but you can bet its not a good investment for many people. That was actually Mark Cubans argument, that normal people have no business investing in individual real estate deals based on a few paragraphs on a website.
I don' t think we need the subordinate clause "based on ...".

Normal people if we can use that term have a house and housing equity, that's enough exposure to individual RE assets. The rest, they can own REITs. They need diversification, not concentration.
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Re: Richuncles.com?

Post by Valuethinker »

TNL wrote:
Dulocracy wrote:I would be hesitant to invest in a website with the name rich uncles. First, it sounds like a dating website for creepy old guys to find young, misguided females in need. Second, if they are taking your money, who is the rich uncle?
+1. I thought the same thing. Gross.
It does not sound savoury (or savory).
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Re: Richuncles.com?

Post by Valuethinker »

JoMoney wrote:I think this site is a slightly different idea, but for some reason I'm reminded of the Shark Tank with the guy who was trying to fund a startup to sell real estate development projects through crowd-funding?
https://www.youtube.com/watch?v=tJOV-nhir-I

Amazing how people could flock to RE investing 7 years after the worst RE crash in over 70 years. Commercial as well as residential got hit.

Memories are clearly short.
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Re: Richuncles.com [non-traded REIT]?

Post by Wricha »

Let me play Dutch Uncle for a minute. Unless you are personally involved in the actual formation/developer (first hand knowledge - in the room at the table) of the REIT (public or private) don't invest. Why? My observation Is/has been between the developer fees , contractors fees, maintenance fees, management fees, sales commissions, marketing cost etc. there is absolutely no money left for the investor. The investor will get some return on the rent but all the big money is gone before the first investor is asked to participate. That carcass (real estate) is carved up so fast that you would swear that a pack a wolves just past through. Capital gains when you sell the property? Unlikely in this 6 cap rate environment. Bumps in rent goes to investor? Not so fast that will also be shared with the wolf pack. Just one observation.
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Re: Richuncles.com [non-traded REIT]?

Post by wickywack »

The math on their page seems a bit dodgy:

7.5% (expected annual dividend) + 2% (expected annual gain) + sleight-of-hand = 12% projected annual return

They have a facebook post that shows how they come up with this:

https://www.facebook.com/richuncles/pho ... =3&theater
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Re: Richuncles.com [non-traded REIT]?

Post by Bogle_Feet »

Unless this REIT is traded on the NYSE or NASDAQ then it's a non-traded REIT. It's as simple as that.

I'm amazed at how people invest in stuff based on hearing a commercial on the radio or going to a seminar. Doesn't that sound the red flag??? How many times have we been told not to go to free seminars! People never learn. If it was such a great investment opportunity then why not sell it to the banks or fund managers to invest in? And how difficult is it for people to invest in a REIT stock on the NYSE? At least with a publicly traded company you know you are paying a fair price for it and you can sell it at a moment's notice Mon - Fri during trading hours. And analysts review these companies. If they have too much overhead costs (managers and what not) then this will be reflected in the price. Publicly traded securities are also more strictly regulated by the SEC.

If the economy goes south then these non-traded REITS may surprise investors with huge one day double digit percentage drops in share value. They are presented as not being volatile like publicly traded stocks but think about it...... When people buy, sell and rent real estate they don't care if they're dealing with a private or public company. The real estate market will determine prices. Non-traded REITS have no advantage.
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Re: Richuncles.com?

Post by ogrehead »

barnaclebob wrote:There was someone who brought a real estate version of lending club onto Shark Tank. He got properly destroyed by Mark Cuban. It may not be an outright scam but you can bet its not a good investment for many people. That was actually Mark Cubans argument, that normal people have no business investing in individual real estate deals based on a few paragraphs on a website.
Yup, bears viewing again: http://abc.go.com/shows/shark-tank/vide ... 0_nbggkmbg

Every word applies to this site. Cuban hated the name Tycoon ("That's a ripoff name!"), he would have loved Richuncles.
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Re: Richuncles.com [non-traded REIT]?

Post by skepticalobserver »

The best way to evaluate this product is to look at the offering document (click on “Prospectus” under “Documentation”). If you can stomach the risks associated with the investment AND you’re a CA resident AND you meet their minimum suitability standards, this might be for you.

Briefly, Rich Uncles is a security exempted from SEC registration under the “intrastate offering” exemption; accordingly, no filed audited financials. Moreover, there’s no ready market for this security, and so it's another UFO (U Freakin’ Own it) non-traded REIT. Check out expenses--among the many there’s a 3% front load.

The Rich Uncles “blind pool” may be a good deal. But once purchased this product brings to mind the punch line: “Sell to whom?”
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Re: Richuncles.com?

Post by Watty »

Dulocracy wrote:I would be hesitant to invest in a website with the name rich uncles. First, it sounds like a dating website for creepy old guys to find young, misguided females in need. Second, if they are taking your money, who is the rich uncle?
The cheesy name like that is almost certainly intentional in order to help only attract clueless people that will be easy marks.

Many telephone and email scams intentionally start off sounding clearly like a scam so that 99% of the people will just hang up, but the 1% that don't hang up are the gullible people, like seniors with early dementia, and those are who are their real targets are.

For example the emails with poor English about some fortune waiting for you in Nigeria are intentionally crude so that 99.9999% of the people will self select and ignore it but the few clueless people that do respond will be the ones they want to target and try to scam. Apparently even scammers that are outside of Nigeria will claim to be from Nigeria since it has such a bad reputation that people with a clue will not respond.
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Re: Richuncles.com [non-traded REIT]?

Post by Bogle_Feet »

Usually the advisor gets paid a hefty commission. Not good.

Another thing with non-traded REITS versus publicly traded ones is that they have to be wound down. You have the added expense of selling the property (real estate agent commissions, closing costs). Publicly traded companies usually don't have these expenses because they are ongoing operations.

If the real estate market goes up in California I'm sure the Rich Uncles investors won't have a clue. They'll just think "I did a whole better than that CD I had that was earning 1%", never considering how the publicly traded California REITS did.
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Re: Richuncles.com?

Post by Howard Makler »

Rob5TCP wrote:Non traded REITS don't have a great record. And not just because of the high commissions.
When you sell out in your REIT, THEY determine the value not the market.
If you wish to sell early; you have to go through THEIR operation REITBid.com.

You have limited liquidity and poor transparency (you basically take their value for the shares, not the market's). Since their REITbid.com
is very limited, I would not expect great prices to be realized.

I will stick with public REIT (fund) anytime.

NOT TRUE. You are not required to use REITbid, we have a direct redemption program. It does not take years, it only takes to the next quarter.

[OT comments removed by admin LadyGeek]
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Re: Richuncles.com [non-traded REIT]?

Post by Howard Makler »

JamesSFO wrote:So these guys have been advertising heavily in the SF Bay Area of late https://www.richuncles.com/.

Seems like a privately held individual REIT; but the advertising makes it sounds like it is some sort of Prosper/Lending Tree where you get to co-invest with experts. I suppose both things could be true, but it feels off and the "catchy" name seems fake.

Anyone seen analysis of the company? Blog posts about actual results/experiences?

Unfortunately, the people giving you advice do not know the true details of our offering.
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Re: Richuncles.com [non-traded REIT]?

Post by Howard Makler »

Bogle_Feet wrote:Usually the advisor gets paid a hefty commission. Not good.

Another thing with non-traded REITS versus publicly traded ones is that they have to be wound down. You have the added expense of selling the property (real estate agent commissions, closing costs). Publicly traded companies usually don't have these expenses because they are ongoing operations.

If the real estate market goes up in California I'm sure the Rich Uncles investors won't have a clue. They'll just think "I did a whole better than that CD I had that was earning 1%", never considering how the publicly traded California REITS did.

We charge no sales commissions. It is sad to see people commenting that have no actual knowledge of how our REIT operates.
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Re: Richuncles.com [non-traded REIT]?

Post by LadyGeek »

We have verified the identity of Howard Makler as the founder of Rich Uncles.

I want to be very clear that we will permit company officers or representatives to post here only to correct factual errors. See our guidelines: No Solicitation
Please do not solicit business or website traffic on this forum. A discreet link to your personal website or blog in your profile is allowed. The moderators and administrators reserve the right to determine unilaterally what constitutes solicitation, to remove such material, and to ban a repeat offender if necessary.
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Re: Richuncles.com [non-traded REIT]?

Post by abuss368 »

Hi JamesSFO,

I am unfamiliar with this REIT. We have been long time investors in the Vanguard U.S. and International REIT Index funds and are pleased with the diversification, low costs, and simplicity.

Keep investing simple.

Best.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Richuncles.com [non-traded REIT]?

Post by Bogle_Feet »

Howard Makler wrote:
Bogle_Feet wrote:Usually the advisor gets paid a hefty commission. Not good.

Another thing with non-traded REITS versus publicly traded ones is that they have to be wound down. You have the added expense of selling the property (real estate agent commissions, closing costs). Publicly traded companies usually don't have these expenses because they are ongoing operations.

If the real estate market goes up in California I'm sure the Rich Uncles investors won't have a clue. They'll just think "I did a whole better than that CD I had that was earning 1%", never considering how the publicly traded California REITS did.

We charge no sales commissions. It is sad to see people commenting that have no actual knowledge of how our REIT operates.
Does your adviser get paid???????? I've never heard of a REIT that didn't have an adivser making a large amount of money.
You didn't even address whether RU is expected to be wound down (sold off). That is generally how non-traded REIT's work. That's what's unique about them when compared to public REIT's.
It's sad when people dodge questions.
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Re: Richuncles.com [non-traded REIT]?

Post by Valuethinker »

skepticalobserver wrote:The best way to evaluate this product is to look at the offering document (click on “Prospectus” under “Documentation”). If you can stomach the risks associated with the investment AND you’re a CA resident AND you meet their minimum suitability standards, this might be for you.

Briefly, Rich Uncles is a security exempted from SEC registration under the “intrastate offering” exemption; accordingly, no filed audited financials. Moreover, there’s no ready market for this security, and so it's another UFO (U Freakin’ Own it) non-traded REIT. Check out expenses--among the many there’s a 3% front load.

The Rich Uncles “blind pool” may be a good deal. But once purchased this product brings to mind the punch line: “Sell to whom?”
Dear Lord ....

I had no idea US securities law allowed such beasts to be marketed to non-professional investors.

The expression "drop it and run like it is radioactive waste" suggests itself...
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