Posted in the REIT Forum

Good afternoon Joshwa

Wandering if you are still interested in doing REITs?

I found a post online that you are in the arena. sort of.

#36 Sep 9, 2012

Instructions

Things You’ll Need-

100 investors

Lawyer

How to Start a Real Estate Investment Trust

Write a partnership agreement for the partners who are forming the REIT. The partnership agreement needs to contain details on ownership, management responsibilities and financial contributions. The partnership agreement should be in the form of a limited liability corporation and must be drafted by a lawyer.

File the certificate of incorporation with the secretary of state in the state where the REIT will be based and do business. The fee to file varies from state to state.

Write a private placement memorandum (PPM). A PPM is used to introduce the REIT and its investment objectives to possible investors for the purpose of soliciting funds. Have several Investment properties listed that are potential properties for Investment.

Send the PPM out to qualified potential investors. This can be done individually or through a group setting.

Sign up at least 100 investors, the minimum required for a REIT.

Change the previous partnership agreement to reflect the new REIT and amend the certificate of incorporation with the secretary of state’s office.

File an Internal Revenue Service form 1120, which exempts you from having to pay corporate taxes on revenue from the REIT, provided that 90 percent of the earnings are distributed.

Invest the capital that has been raised in real estate assets.

Tips & Warnings

As with any investment or business venture, advice from professionals is recommended. The documents needed to form and run a REIT should be prepared and reviewed by legal and accounting professionals.

How to Understand REITs

Clayton Browne

Clayton Browne has been writing professionally since 1994. He has written and edited everything from science fiction to semiconductor patents to dissertations in linguistics, having worked for Holt, Rinehart & Winston, Steck-Vaughn and The Psychological Corp. Browne has a Master of Science in linguistic anthropology from the University of Wisconsin-Milwaukee.

By Clayton Browne, eHow Contributor

A real estate investment trust, or REIT, is a stock exchange-traded investment vehicle based on real estate. Individual REITs tend to focus on a specific area of real estate, office or residential or retail, for example, but some REITs are diversified and invest in all areas of real estate. REITs have special tax advantages compared to other companies in that they avoid most corporate income tax. But IRS regulations require that REITs distribute at least 90 percent of their taxable profits as dividends to their shareholders.

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Tax Implications of a REIT

Instructions

Research real estate investment trusts. Learn how investment trusts compare to mutual funds and other investment vehicles (including traditional real estate investments and company stocks) and decide whether they are right for you.

Research specific REITs. There are hundreds to choose from (including mortgage REITs and a couple of REITs that only invest in golf courses), but you should probably limit yourself to three or four to start with. Compare the net asset value (NAV) of the REITS you are looking at as well as the ROI (return on investment, which is the increase in NAV + dividend) over time to decide which one(s) look best to you.

Make a small investment in one or two REITs on a test basis. Follow your REITs closely (they are listed on the NYSE and NASDAQ exchanges like any other stock) and note how the investment performs over time. If the REIT is producing a steady profit and you like the types of investments the management is making, consider increasing the amount you have invested.