Wall Street, Wall Street, Wall street - always trying to manipulate Main Street. I cannot open the financial news without an article trying to drive investors away from investments that make sense, towards the ultra-risky, volatile, and underperforming stock market.
Another Example of Wall Street Trying to Manipulate Main Street.
Read this latest example: "Why Warren Buffet Doesn't Buy Real Estate and Most Other Investors Shouldn't Either." The article makes the point: "Buying and managing real estate is more of a business than an investment, and Buffett knows that his time is better spent choosing companies to invest in than running a real estate business." While I can agree with the first half of the sentence, I heatedly oppose the second part. Think of how little we know about the inner workings of a company and the thousands of variables we cannot control. Compare that to the relatively simple balance sheet of a real estate investment.
The real point that I want to emphasize is how the article pretends there is no such thing as private equity. The authors of these articles know perfectly well that investors can passively invest privately in real estate through syndication and build lasting equity, without having to get into the business of managing tenants and finding deals. Why would they open up the investing world to this little-known "secret" when this would take investors away from Wall Street and, therefore, their fees? Warren Buffet isn't stupid, either. If you go investing your money into commercial real estate private placements, you won't be placing it into shares of Berkshire Hathaway.
Perhaps, what I found most aggravating is the quote: "Buffett isn't opposed to investing in real estate and has invested in several real estate investment trusts (REITs) over the years." Ugh – trying confuse people into believing buying REITs is owning Real Estate. You are not getting equity with REITS. You are buying stock in a company that invests in commercial real estate, and they are available on, you guessed it, Wall Street.
Thus, earning money from publicly owned REITs is like making money from stocks. You receive dividends from the company's profits and can sell your shares at a profit when their value in the marketplace increases. However, you are not building equity and you do not reap the tax benefits you do from investing in Real Estate.
I see these articles weekly, and they chap my hide because they intentionally do not give the whole story to investors. You may think the rest of the investing world knows about our little secret, but it doesn't. You are literally amongst a private club when investing in syndications. Now am I bias? Am I attempting to lead you away from Wall Street? Maybe, but at least you now have the full story.