Has anyone started up a private real estate investment trust or investment company?
Reason I ask is because I would like to expand my rental business but have little to no liquid cash to do it. My cash return rates are phenomenal, however due to personal issues I haven't been able to save enough back to buy additional properties. I've been suggested to look into this by a few investor friends, however wanted the input of some of the members here on running a endevour like this.
You wouldn't want ti to be a regulated REIT, publicly traded, as the costs for that would be astronomically high anf the regulatory burden too high.
You could form an investing LP and then form a small Corp to be the General Partner.
Only thing under that scheme is that your limited partners are taxed on their share of the profits of the business, whether they actually receive the cash from the LP or not.
So, if you are setup to distribute earnings, that's great. If you want to retain them in order to reinvest them & grow your portfolio, not so great.
My wife and I just started one with 2 other couples this summer. All of us are in our late 30-early 40's and are looking at building this into a sizable number of rental properties that will be our retirement, since social security is a joke.
Make sure you are all on the same page as to where you want the business to go, and only partner up with people you have known a long time, and can trust.
The number of empty properties for sale, plus the low prices, and forclosed on people( who will now be renters for the next 7 yrs) make this an ideal time to get into this area.
Our group is fortunate in that 1 couple are realtors, and two of us have extensive construction/remodeling background, and flexible work schedules.
We're using our startup cash, plus money from flips to buy rental properties. If you are a cash buyer you can get some great deals.
We set up a sub-s since we are doing flips, and will have several of us drawing wages. If you are simply going to get rental properties for long term investments, then a simple LLc should work for you.
We've found out that there are a lot of details and paper work to iron out initially, but once all that crap is taken care of, it starts to run pretty smooth
Make sure you have the right people in your group, and never over leverage yourself and you should do fine.