REIT investing - Good or bad idea

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REIT investing - Good or bad idea

Dona Cardenas
Real Estate Agent · Atlanta, GA · Member since 2020 · 18 posts · 8 votes

I recently saw an add or a post about Rad Diversified. It's a REIT and they claim their return was 36% last year. They specialize in tax deed purchases, rehab, tenant occupy then cash out and refi and repeat the process. Anyone have any experiences with them?

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Tim Livian
Miami, FL · Member since 2015 · 12 posts · 7 votes
5y

They're taking massive fees 2% on assets they manage, 20% on increases in net asset value, large salaries for only $7-8m assets, they are self dealing with a $2m in promissory notes that pay Dutch's other entities 10.95% interest. 

i think the 36% return might be before all these fees or for his 3 other entities that lent the company money at a very high rate.

source: their sec filings https://sec.report/CIK/0001721...

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  • Navin P.
    Investor · Brooklyn, NY · Member since 2017 · 11 posts · 2 votes
    5y

    Curious as to this as well. Obviously a very large return. 


    Dona, did you receive any further information?  

    0Reply
  • David Fisher
    Real Estate Agent · Sewell, NJ · Member since 2018 · 4 posts · 3 votes
    5y

    I'll keep you posted - just put a small investment ($1,000) in it this week to see.

    2Reply
    • Ethan Spielvogel
      Member since 2018 · 11 posts · 3 votes
      5y
      Originally posted by @David Fisher:

      I'll keep you posted - just put a small investment ($1,000) in it this week to see.

      Any news?

      0Reply
  • Dan Jennings
    Member since 2019 · 7 posts · 1 vote
    5y

    I just put $10k with them.  They seem legit but I am curious to see the real returns.

    1Reply
    • Viva Pedersen
      Member since 2025 · 1 post · 0 votes
      1y
      Quote from @Dan Jennings:

      I just put $10k with them.  They seem legit but I am curious to see the real returns.

      RUN!
      0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    5y

    @Dan Jennings

    Curious if anyone read their sec filings

    https://sec.report/Document/0001104659-21-070365/?_gl=1*e1b0t0*_ga*U0FnQjFTc05Gb2t3WmVFcUFHZzlHcXhBdW1URDJSZHhHLWg2U2h0SS1pd2ZDVDNSYkprM0tNU3ZzTE1vdDdfQg..

    “As a result of the foregoing, the Company reported a net loss of $616,388 in the year ended December 31, 2020 versus a net loss of $68,202 in the year ended December 31, 2019.”

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  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    5y
    Originally posted by @Chris Seveney:

    @Dan Jennings

    Curious if anyone read their sec filings

    https://sec.report/Document/00... a result of the foregoing, the Company reported a net loss of $616,388 in the year ended December 31, 2020 versus a net loss of $68,202 in the year ended December 31, 2019.”

    INCREDIBLE!! They've been able to return 36% to investors on a net loss?? We need them to run this country!

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    5y

    @Account Closed

    It also does not show them having raised significant funds for a REIT. I have been told by many any raise under $50M do a reg c exemption and $50Mmis the cutoff for a reg a+ and $100M for a reit due to setup costs.

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  • Chris Levarek
    Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
    5y

    Sounds like they are simply getting some depreciation or paper loss. Providing a return and having a paper loss is fairly typical. 36% is interesting though...

    2Reply
  • Armando Dacal
    Member since 2021 · 2 posts · 1 vote
    5y

    Here there, just curious how the investments with RAD Diversified are going? A couple of people had made investment. Is this legit? I am new to this forum.  

    0Reply
  • Robert Matthews
    Member since 2021 · 1 post · 0 votes
    5y

    Seems like they have a lot of advertising ramping up.  I am totally new to this sort of investing and would appreciate any feedback.

    0Reply
  • Tim Livian
    Miami, FL · Member since 2015 · 12 posts · 7 votes
    5y

    They're taking massive fees 2% on assets they manage, 20% on increases in net asset value, large salaries for only $7-8m assets, they are self dealing with a $2m in promissory notes that pay Dutch's other entities 10.95% interest. 

    i think the 36% return might be before all these fees or for his 3 other entities that lent the company money at a very high rate.

    source: their sec filings https://sec.report/CIK/0001721...

    5Reply
  • Allen Wu
    Rental Property Investor · Member since 2021 · 335 posts · 193 votes
    5y

    @Dona Cardenas

    No familiar. For me, I rather invest in a reit etf or more private reit like fund rise. House brand names.

    I would never get into syndication or smaller private reits. Risk seems too high for bad actors.

    My real estate slice of portfolio only includes public market REITs and Reit ETF, private reits like fund rise, or properties i own myself.

    0Reply
  • Shaun R.
    Investor · Denver/Breck · Member since 2016 · 10 posts · 1 vote
    5y

    according to their accountant, the 36% return is net of fees. 

    here is the info I received : 

    "To answer your question as succinctly as possible, on January 1, 2020 we were still selling shares at $10.00 per share. Your sample $10,000.00 investment would have purchased 1,000 shares. As of January 1, 2021, we were selling shares for 13.67 per share. The increase was $3.67 per share, which is 36.7%. Your 1,000 shares would carry a value of $13,670.00 as of January 1, 2021.
    Our price per share is calculated as follows:

    • Total value of all assets (LESS) Total Liabilities (EQUALS) Net Asset Value (also referred to as Net Equity).
    • Net Asset Value (DIVIDED BY) Total Number of Outstanding Shares (EQUALS) Net Asset Value Per Share (aka Net Equity Per Share or Book Value per Share).
    • Our Net Asset Value per share becomes our new stock price per share. Calculations are made quarterly, within one month after the end of each quarter.

    No recurring distributions or dividends have been paid to date. If you have any further questions or comments, please feel free to reach out. Thank you for your interest, and we look forward to working with you."

    0Reply
    • Douglas Curtiss
      Investor · CT · Member since 2019 · 67 posts · 15 votes
      5y
      Originally posted by @Shaun R.:

      according to their accountant, the 36% return is net of fees. 

      here is the info I received : 

      "To answer your question as succinctly as possible, on January 1, 2020 we were still selling shares at $10.00 per share. Your sample $10,000.00 investment would have purchased 1,000 shares. As of January 1, 2021, we were selling shares for 13.67 per share. The increase was $3.67 per share, which is 36.7%. Your 1,000 shares would carry a value of $13,670.00 as of January 1, 2021.
      Our price per share is calculated as follows:

      • Total value of all assets (LESS) Total Liabilities (EQUALS) Net Asset Value (also referred to as Net Equity).
      • Net Asset Value (DIVIDED BY) Total Number of Outstanding Shares (EQUALS) Net Asset Value Per Share (aka Net Equity Per Share or Book Value per Share).
      • Our Net Asset Value per share becomes our new stock price per share. Calculations are made quarterly, within one month after the end of each quarter.

      No recurring distributions or dividends have been paid to date. If you have any further questions or comments, please feel free to reach out. Thank you for your interest, and we look forward to working with you."

      So if they haven't distributed yet, it's a 36.7% paper gain, right? I mean you can't realize that gain until you sell your shares and if it's not a publicly traded REIT, I imagine there is not much of a market for reselling them.

      2Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      5y
      Originally posted by @Shaun R.:

      according to their accountant, the 36% return is net of fees. 

      here is the info I received : 

      "To answer your question as succinctly as possible, on January 1, 2020 we were still selling shares at $10.00 per share. Your sample $10,000.00 investment would have purchased 1,000 shares. As of January 1, 2021, we were selling shares for 13.67 per share. The increase was $3.67 per share, which is 36.7%. Your 1,000 shares would carry a value of $13,670.00 as of January 1, 2021.
      Our price per share is calculated as follows:

      • Total value of all assets (LESS) Total Liabilities (EQUALS) Net Asset Value (also referred to as Net Equity).
      • Net Asset Value (DIVIDED BY) Total Number of Outstanding Shares (EQUALS) Net Asset Value Per Share (aka Net Equity Per Share or Book Value per Share).
      • Our Net Asset Value per share becomes our new stock price per share. Calculations are made quarterly, within one month after the end of each quarter.

      No recurring distributions or dividends have been paid to date. If you have any further questions or comments, please feel free to reach out. Thank you for your interest, and we look forward to working with you."

      Curious what the agreement says for recurring distributions and if they are making all of this $ then why have distributions not been made? To me anyone promoting a 36% return I would question and want to understand the risk. Can it be achieved yes (I have done it in a fund) but would I promote that as normal - hell no. 

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  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Dona Cardenas

    I like investing small amounts in publicly traded reits like VNQ (vanguard). They are up 30% in the past 12 months. My return has been 24%.

    2Reply
  • Jim Smith
    Member since 2021 · 1 post · 0 votes
    5y

    Regarding other REITs: I looked at VNQ and REZ. The last 12 months were very good for them. However, if you zoom out a little, you can see they did poorly: dipped as much 30% and in 5 years only grew 20-30% (NOT annual). Dividends yield is in the 2% range. So I think RAD gives much better return if they can continue that trend. I think that's everybody's concern. They are young and not as transparent as a traded REIT. But they are more stable because their share price is based on quarterly asset valuation which is not going to drop 40-50% in one month as the others did in March'20.

    My assumption is we can trust everything in the SEC filings.  I think it's worth investing a small amount to get inside and see how it goes.

    0Reply
  • Dan Jennings
    Member since 2019 · 7 posts · 1 vote
    5y

    RAD Zoom meeting tonight:
    Thank you for your interest in RAD Diversified.This is an open invitation.We will have a Zoom meeting where Dutch Mendenhall will discuss many aspects of RAD.RAD is transparent, and we don’t hide anything.This is your chance to ask whatever questions you have in regards to RAD.Join us and others just like you!See you at the meeting.ZOOM Link:https://us02web.zoom.us/j/85971272592

    0Reply
  • David Fisher
    Real Estate Agent · Sewell, NJ · Member since 2018 · 4 posts · 3 votes
    5y

    Just received my statement for 2nd quarter yesterday. Share price increased from $15.66 to $16.39. Gain of 4.66%

    1Reply
  • Amber Cook
    Member since 2021 · 1 post · 0 votes
    5y

    So you feel its been a safe move for you to join RAD? I too was considering it so a real customers feelings and experience is very obviously invaluable. Thanks!

    0Reply
  • Account Closed
    Member since 2021 · 1 post · 0 votes
    5y

    We just invested in RAD REIT today, fingers crossed.

    0Reply
  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 2k+ posts · 3k+ votes
    4y

    @Dona Cardenas

    I personally think actually owning physical real estate is the best way to go especially using leverage. Once you combine cash flow, appreciation, debt reduction, tax benefits, equity, depreciation, inflation hedge, rental increases over time, etc. I think the numbers will far out perform a REIT even with a mediocre deal.

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  • Ryan Johnstone
    Member since 2021 · 1 post · 1 vote
    4y

    David Fisher, you mentioned receiving a statement but did they do a distribution as well?  Someone in the thread mentioned that RAD has not done distributions.  How do you get your profits?

    1Reply
  • David Fisher
    Real Estate Agent · Sewell, NJ · Member since 2018 · 4 posts · 3 votes
    4y
    Originally posted by @Ryan Johnstone:

    David Fisher, you mentioned receiving a statement but did they do a distribution as well?  Someone in the thread mentioned that RAD has not done distributions.  How do you get your profits?

    No distributions as of yet, just an increase in the share price. Honestly I haven't really explored yet how to cash out and get any profits.

    0Reply
  • Michael Katz
    Member since 2022 · 1 post · 1 vote
    4y

    I've been investing with them since 2020. Haven't had any issues with withdrawing my funds. Hope that helps.

    1Reply
  • Tony Guardado
    Rental Property Investor · Canton, OH · Member since 2014 · 74 posts · 28 votes
    4y
    Originally posted by @David Fisher:

    I'll keep you posted - just put a small investment ($1,000) in it this week to see.

    Where are you purchasing or investing at?

    0Reply
  • Dylan Barnard
    Rental Property Investor · Justin, TX · Member since 2017 · 134 posts · 57 votes
    4y

    @Dona Cardenas

    When I worked for a financial advisor, they used REITs as a way to distribute wealth for their clients in a strategic and tax advantaged way. They almost always posted a capital loss when selling, but when factoring in the dividends, most clients still came out ahead. I always think about this when looking at REITs. They could be perfect for certain strategies but terrible for others. If you're looking for growth, REITs are typically not the best way to realize that goal. But each REIT has different strategies and goals. Just proceed with caution and be objective. 36% seems like a red flag (salesman trying to sell you an inferior product - too good to be true).

    2Reply
  • Navin Pal
    Brooklyn, NY · Member since 2017 · 2 posts · 1 vote
    4y


    Article     about their business that I can across:

    https://www.inquirer.com/busin...

    1Reply
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