Experience starting a REIT?

Question

Hello forum!

I am a working professional with a moderate real estate portfolio. I am wondering if anyone here has experience starting a REIT?  My partners and I feel we're on to a niche opportunity and I would like to explore the possibility of establishing a fund. I appreciate anyone's input that may be willing to share.

thanks in advance,

Eric (Connecticut)

Chris Seveney · Answer

@Stuart Udis  I agree. Especially if it is a single investment because you need 100 investors to achieve a reit status and most single investments do not.

unless you plan on getting to $50M+ in raise and be open ended fund, reit probably doesn't make sense as the cost to manage it (accounting etc) is astronomical

Stuart Udis · Answer

@Eric Wilmot Can you elaborate on this niche investment opportunity/investment strategy? In most cases utilizing an LLC or LP is the preferred investment vehicle. Difficult for anyone provide input on whether structuring as a corporation makes sense without understanding your business plan.

Eric Wilmot · Answer

Thanks for the insight!    And yes, indeed there are many tentacles to the REIT.

Chris Seveney · Answer

First thing you have to realize with a reit, is it must be passive. A reit just an entity structure that has special taxation. They are typically started out as corporations that once they hit reach reit status will turn into a reit. We went down a very long rabbit hole into looking into whether our company would benefit as being a reit, but because we are very active company managing defaulted loans  - , it did not make sense as it would have kickstarted a TRS and then it just gets very complex

Experience starting a REIT?

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