Dividend <b>Investing</b>: Is This <b>Real Estate</b> ETF Smarter? CBG <b>...</b> | Real Estate Investing |
- Dividend <b>Investing</b>: Is This <b>Real Estate</b> ETF Smarter? CBG <b>...</b>
- Schemer's Unauthorized <b>Real Estate Investment</b> May Pay Off For <b>...</b>
- Connected <b>Investors</b> Debuts Global <b>Real Estate</b> Crowdfunding <b>...</b>
- <b>Real estate investors</b> might be fleeing other markets, but they're still <b>...</b>
| Dividend <b>Investing</b>: Is This <b>Real Estate</b> ETF Smarter? CBG <b>...</b> Posted: 13 Aug 2015 04:42 PM PDT The prospect of rising rates has weighed on ETFs holding real estate investment trusts (REITS) in 2015. IShares U.S. Real Estate (ARCA:IYR) has fallen 0.2% year to date. But it's a top performer among sector equity exchange traded funds over the past 15 years, with an average annual 10% gain. Real estate is increasingly important to investment success for financial advisors and investors. It's seen as a distinct asset class, offering both capital appreciation and potential for income. That's why it's poised to become the 11th S&P sector next year. Currently, it's an industry group that falls within the financial sector. Guggenheim S&P 500 Equal Weight Real Estate (ARCA:EWRE) offers a novel twist to investing in real estate. It's the first "smart beta" ETF among 19 products in the category. Most of its peers follow market-cap-weighted indexes, meaning larger stocks have a bigger weight in the portfolio. Smart beta products employ an alternative indexing method. In the case of EWRE, each of its 25 holdings gets an equal stake of assets. No one stock is more important than another. So Simon Property Group (NYSE:SPG), with a $59 billion market cap, gets the same portfolio weighting as Plum Creek Timber (NYSE:PCL), with a $7.2 billion market cap — 4%. In the case of cap-weighted, $2.77 billion IYR, No. 1 holding Simon Property Group gets a 7% portfolio weighting and Plum Creek Timber less than 1%. Both ETFs hold CBRE Group (NYSE:CBG), the world's biggest commercial real estate company and an IBD Leaderboard stock. Equal weighting can boost long-term returns by reducing the large-cap bias of cap-weighted ETF investment strategies, says William Belden, a managing director of Guggenheim Investments. "An equal-weight approach also may enhance portfolio diversification by reducing concentration risk," he added in a press release. EWRE rebalances quarterly to maintain target weights. That tends to increase turnover costs. Belden points out that EWRE invests primarily in equity REITs, "which have a history of providing consistent above-average dividends, which can be used to meet current income needs or reinvested to accumulate wealth." The ETF shuts out mortgage REITS, which sell and service residential and commercial mortgage loans. REITs pay no corporate income tax. In return, they are required to pay out most of their profits as dividends to shareholders. IYR yields 3.69%. EWRE has a 0.4% expense ratio vs. 0.45% for IYR. IYR rose 0.2% on the stock market today Follow Aparna Narayanan on Twitter: @IBD_ANarayanan.  |
| Schemer's Unauthorized <b>Real Estate Investment</b> May Pay Off For <b>...</b> Posted: 10 Aug 2015 05:33 PM PDT Victims of one of the largest Ponzi schemes uncovered in Long Island may soon recoup a significant chunk of their losses from the sale of a luxury Montauk resort that the scheme perpetrator purchased using misappropriated investor funds. Brian Callahan and Adam Manson, who each currently await sentencing after pleading guilty for their role in duping investors out of close to $100 million, used tens of millions of dollars in investor funds to purchase the Panoramic View in Montauk, New York, early in the scheme. While the scheme collapsed in 2013, the property has appreciated considerably in value as as beneficiary of the rise in real estate values over the past half-decade. While the property remains on the market, it appears that a sale could result in the payment of close to 50% of approved investors losses - a welcome development and well above the pennies on the dollar that most victims typically receive in the aftermath of such schemes. Authorities indicted Callahan and his brother-in-law, Manson, in August 2013. According to the indictment, Callahan managed multiple offshore investment funds organized in Nevis and the British Virgin Islands, told most investors that their funds would be invested in various New York hedge funds, and required a $5 million minimum investment. Other investors were told they would receive above-average returns by investing in a fund that traded high-dividend stocks, bonds, and certificates of deposit. Investors were provided with regular account statements purportedly showing consistent account growth. In total, the funds raised nearly $120 million from at least 40 investors, including the Montauk, N.Y. volunteer fire department and a Maryland investor that alone lost $11 million. However, rather than using investor funds as promised, the men ran a classic Ponzi scheme where they used new investor funds to pay purported returns to existing investors. In addition, the men diverted tens of millions of dollars in investor funds for other unauthorized purposes, including credit card bills, golfing club dues, down payments on multiple houses, and payments for luxury automobiles including a Range Rover and BMW. Through their company, Distinctive Ventures, Callahan and Manson also diverted at least $30 million of investor funds to acquire Panoramic View in 2007. The resort, a stunning ten-acre parcel of property in Montauk consisting of private residences and a hotel, was refurbished with the goal of selling the residences and focusing on operating the hotel. However, the purchase came on the eve of the well-known collapse in the real estate market, and the market for such an exclusive property soon dried up. After the Securities and Exchange Commission brought an action against the men in 2012, the federal government filed a criminal forfeiture action that same year and has been responsible for the property ever since. Notably, a New York federal judge denied the government's attempt to sell the property for $54 million in 2013, finding that the sale was not commercially reasonable given that a valuation had priced the property as high as $88 million and that the amount would only leave approximately $36 million for investors after paying off higher-priority outstanding liens. The government has been accepting new bids for the sale, with all interested parties having until Wednesday, August 12, 2015 to submit any indication of interest to USANYE-Panoramic@usdoj.gov. For investors, the proceeds from the sale of the Property likely represent their only hope to recoup more than pennies on the dollar of their losses - losses that the court-appointed receiver collectively pegs as nearly $100 million. The receiver has amassed nearly $7 million for distribution to investors to date, meaning that investors could realistically expect to recoup close to half of their losses should the Property sell for an amount above $60 million. The Court's previous order denying the motion to sell the Property is below:
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| Connected <b>Investors</b> Debuts Global <b>Real Estate</b> Crowdfunding <b>...</b> Posted: 12 Aug 2015 10:35 AM PDT This week, real estate investors network and marketplace, Connected Investors, announced the launch of its aggregated real estate crowdfunding marketplace. For the first time, investors will be able to quickly locate and evaluate investments available across the real estate crowdfunding industry in the US and around the world.
Ross Hamilton, founder and CEO of Connected Investors stated:
The Connected Investors crowdfunding marketplace allows the investor to select investment opportunities by the location, rate of return, investment amount, along with other investing parameters.
Crowdfunding investment group, Patch of Land's CEO Jason Fritton added:
With over 200,000 members Connected Investors is larger than all of the real estate crowdfunding portals combined and looks to bring mass awareness to an industry with an estimated market size of $11 trillion during its infancy. . Bookmark the . |
| <b>Real estate investors</b> might be fleeing other markets, but they're still <b>...</b> Posted: 28 Jul 2015 12:00 PM PDT Are you set up for success in 2016? Join 2,500 real estate industry leaders Aug. 4-7, 2015, at Inman Connect in San Francisco. Get Connected with the people and ideas that will inspire you and take your business to new heights. Register today and save $100 with code Readers. Takeaways:
Philadelphia is no Las Vegas, but when it comes to real estate investing, the City of Brotherly Love is giving Sin City a run for its money. "The investor market has just been incredibly hot in Philadelphia," said Vince D'Agostino, a shareholder at Foundation Title, which has 14 offices throughout Pennsylvania and New Jersey. D'Agostino said teardowns are common as neighborhoods gentrify. "Some up-and-coming neighborhoods you have some impressive condos (being built)." Read the full Housing News Report — exclusively for Inman Select members.
In the first quarter of 2015, 820 single-family homes and condos were flipped in Philadelphia, an increase of 25 percent from a year ago. By comparison, there were 891 flips — defined as any property sold for the second time within a 12-month period — in Las Vegas in the first quarter, down 7 percent from a year ago. How profitable are flips in Philly? Have investors, want properties "I have a list of investors. Finding the properties is the problem," said Bob MacHarrie, a real estate agent with Re/Max Access covering the core neighborhoods in the city of Philadelphia. MacHarrie said real estate investors are moving further out of the Center City neighborhood at the epicenter of Philadelphia and into adjacent neighborhoods that still have upside potential for flipping and other investment strategies. "For single-family homes, there is almost nothing in Center City, so they have to go into the secondary ones. And in reality they are really pushing those boundaries," MacHarrie said. Investors are pushing those boundaries out as far as Cherry Hill, New Jersey, which is located just across the Delaware River from Philadelphia, according to Gary DeGree Sr. DeGree is the owner of 1st DEGREE Realty, which covers Camden County (where Cherry Hill is located) along with Mercer, Burlington, Gloucester and Salem counties in New Jersey.
DeGree said he has been involved in real estate for about 30 years and owned his company for about two years. "The all-cash investors, they are going to make out with the better deals." All-cash buyers purchased 5,220 single-family homes and condos representing 41 percent of all sales in the Philadelphia metro area during the first quarter. That 41 percent share was up from a 33 percent share of all sales in the previous quarter and incidentally was also above the 40 percent share of cash sales in Las Vegas during the first quarter. Home sales and foreclosure trends in Philadelphia. Philly investor case study The Chatham Bay Group is one of the investors flooding the Philadelphia housing market with capital, according to Patrick Duffy. Duffy is the founder and CEO of the privately held real estate investment, development and management company located in Wilmington, Delaware — about 30 miles south of the city of Philadelphia. "Over the past three years we have invested over $50 million into the single-family rental space," Duffy wrote in an email. He also said the company invests in multiple asset classes across the Middle Atlantic and Northeast regions of the country. "We love the SFR space because of the asymmetric return profile — lots of opportunity to earn superior risk-adjusted without incurring much in the way of risk," Duffy said. According to Duffy, one of the biggest challenges for Chatham is finding good inventory to buy given the competitive market with a shortage of inventory that meets the company's investing criteria in Philadelphia and other markets. "The most challenging part for us is the sheer amount of time and work it takes to assemble a decent-sized portfolio of single-family homes in mature markets like the Mid-Atlantic that didn't suffer the massive downturn that California, Nevada, Arizona and Florida experienced," he wrote. "To illustrate, we convert on only 8.6 percent of the houses we analyze. So if our goal is to acquire $200M worth of houses, that means we need to analyze $2.3B, or about 12,250 houses, in order to achieve our goal," Duffy wrote. Despite the challenge of finding inventory, Duffy said the opportunity in the single-family rental market remains strong. "I think the most important trend remains a seemingly insatiable demand for well-located houses, which are professionally managed," he said. More on Chatham's investing strategy in Philadelphia and other markets. Daren Blomquist is the vice president of RealtyTrac. |
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