> Hooper says this is less than the fees an investor would pay to participate in a REIT, or real estate investment trust, where 15 percent might go toward fees before investing in the property.<p>It should be noted that he is almost certainly referring to non-traded REITs, which are very different beasts than publicly-traded REITs.<p>RealCrowd's FAQ states:<p><pre><code> RealCrowd is fundamentally different from a Real Estate Investment Trust (REIT) in that you are owning units of an LLC whose sole purpose is to own and operate one asset. Ownership of REIT shares are not physical ownership of real estate, more like a derivative of a real estate, since what you own is a piece of the company that owns real estate. Not only are you subject to the whims of that company, their strategy and the properties they choose to purchase, you are subject to the tremendous volatility of the stock market. By investing on RealCrowd, you are able to control your own portfolio, which assets you choose to invest in and ultimately own the real estate itself, not a financially engineered product that can be wiped out if the stock market goes into a tailspin.
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This is somewhat confusing:<p>1. I fail to see how ownership of units of an LLC differs substantially from ownership of shares of stock of a REIT.<p>2. Each LLC will have a RealCrowd-controlled managing member which "will have the sole and exclusive right to manage, control and conduct the affairs of the LLC" so I fail to see how investors in a RealCrowd vehicle are any less subjected to the "whims" of a third party than investors in a REIT.<p>3. An investment in a single property may or may not be a good idea.<p>4. Non-traded REITs are not subject to the volatility of the stock market.<p>5. Referring to shares of stock in a traded REIT a "financially engineered product" seems a bit over the top. They're no more a "financially engineered product" than units of an LLC.<p>RealCrowd's approach is interesting, but I'm not sure it's <i>drastically</i> different from real estate investment vehicles already out there except in how it's being branded ("just add crowd!").