|
| | Online Investing
- Make Your Portfolio Separate "The Rock Stars From The Groupies"...
Welcome
to the online investing center of the Rainmaker Marketing Corporation
corporate web server. In this section of our web server we
address the issues and answer the questions that online investors send
us on an ongoing basis. Indeed, the opportunities for near-term,
mid-term and longer-term investing can be accommodated within the commercial
real estate development finance envelope. The fundamental
questions pertaining to this segment of the economy include:
 |
Why commercial real
estate? |
|
Can I make this
work with my other online investing activities? |
|
How can I manage my
liquidity needs? |
|
What can I
reasonably expect in terms of gains? |
|
How can I shield my
investments from failure? |
|
What should I look
for in an investment opportunity? |
The answers can be
quite enlightening for unsophisticated investors, but up until the
recent growth in TIC
Plan transactions, unsophisticated investors were rarely admitted to
these transactions because of the extra risks that these investors
create that tend to make things a lot harder for the developer (meaning
unsophisticated investors have standing to sue if the deal folds up,
while sophisticated investors and Qualified Institutional Buyers do
not).
The first think to
understand is why sophisticated investors plow so much money into
commercial real estate transactions:
|
It's all about the
yield. A properly structured and capitalized commercial real
estate development transaction that achieves its business purpose
should put some real meat on your IRA bone - 20% to 45% per annum
returns are what it's about. You rack that up over 10 years
and you suddenly have a portfolio that people will respect. If
you can turn $100,000 into $150,000 within 5 years, you are getting
it! |
|
Everyone worries
about the liquidity. It's a legitimate gripe, or is it?
Are you seeking the yield? Do you like the liquidity the
public markets give your portfolio or are you tired of seeing an
investment go down in value simply because a Wall Street trading
program decided it was time to sell your stock short?
Everything is relative. The glory of commercial real estate
development financing is that buildings rarely loose all of their
value overnight or even over the course of an entire year. |
|
Hold on, it's the
holding period. Commercial real estate transactions are rarely
near-term holds (less than a year). Most are longer-term holds
(5 years or more) but that's not the end of the rainbow. If
the transaction is paying you a 20% per annum return, why do you
want to get out of it? Remember, cows eat, horses eat and pigs
get slaughtered. |
|
Everything about
the commercial real estate development funding is about the deal
structure. The structure of the transaction will tell you
whether it is a real opportunity by the way the operating agreements
are written. If it's all in favor of the developer and the
developer has a mongo track record of making projects just like the
one you're looking at work, then it's probably okay, but if the
developer is new to the product or industry, then you need
protections built in and it's a heck of a lot easier to do it for a
privately held company as opposed to a publicly held company. |
| |
|
|
Do
You Know The Secret?
When it comes to commercial real
estate development finance, it doesn't matter whether you need to raise
$5 million or $50 million, the out-of-pocket costs, advance fees and
project due diligence costs will always require the same relative
investment dollars the promoters have to fund. Do you know what
that amount is? Do you know the Secret? |
|
