Quote:
Originally Posted by Dundasguy
This is a good idea.
The problem is that REITs have to be accretive from inception. Alot of these properties would be high risk distressed sales and would need considerable money to turn arround and start making money. This sort of thing would be too risky for a REIT to fly. You would need to provide a 8-9% return to be competitive and attract investors.
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Then buy it and operate it as a Co-Operative.
With no (limited) capital investment beyond the initial purchase price provides a 7.5% net return based on the information provided in the article. Co-ops don't require the same return, so reduce the return to 4.0% and go forward.
Based on the current net rental income, you could raise $1.8M and still get a 4% return. That would provide the $1M for the purchase and $800K for fees and improvements, which should increase the rental income. You could make disbursements via dividends which are taxed at a preferential rate to make the return more attractive.
So, for $1.8M you would need 1,800 members at $1K/share, or 3,000 members at $600/share, etc.
My wife and I would buy one share each, so only 1,798 or 2,998 left to go........ If the City Hall limestone falls through I'll re-purpose our pledges and pick-up a 3rd share.