While perusing the message board in REIClub.com last weekend, I came across a post from someone who was semi-touting a web site called REI-Exchange.com. The concept seems so common sense, I'm wondering why no one has done this before. I won't go into details - mainly, because I'm still sponging information as we speak - but it appears to be a place where RE investors can go to both "buy" and "sell" their real property. Underneath, a person doesn;t actually buy/sell properties in the traditional sense, but they buy/sell shares of the properties. The company, REI Exchange, handles all the management, so investors need only submit their bids on properties they want to buy (or submit offers to sell). Again, I am still trying to understand all the fine print to get a better feel, but my intial findings are pretty exciting.
So, if you have a lot of money sitting around that you would like to park in a financial vehicle that could potentially bring you a good return, this may be the place for you. It appears your mney could be tied-up for a while (6-18 months?), but the returns can be 25%, 50%, 100%, 500%, and more, depending.
And then something hit me ... Why use my money to buy shares and get a nice profit in the backend?
Prosper.com will allow a person to borrow money from other people (instead of a bank). Why couldn't a person get a loan from Prosper.com and then turn right around and buy shares of properties at REI Exchange? Of course your questions are probably the same as mine ... What fees will I incur? How can I guarantee I (my money) will be protected? How can I determine that I can indeed make a profit doing this? Are there any laws preventing this approach? When all is said and done, wold I be better served using the money for something else? And so on ...
If anyone has more time than me and would like to elaborate on their findings, please post them here and/or shoot me an email. From my early research this appears to be a way to reap infinite ROI without rehabbing, talking to Realtors, qualifying at a bank, looking for deals, etc., as everything is pretty much done at a computer screen.
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Hmm..Interesting. From what I can tell, this is similar to loaning money to someone on Prosper who says they will be flipping houses. The site seems somewhat thrown together - several things are repeated in various parts. If you invest, you are basically hoping whoever you are sending the money to knows what they are doing. There is no talk about what happens when deals go south. There is also very little info on the legal issues of the property title. Who is on the title? Is the share buyer liable in a lawsuit? How can the share buyer enforce payment? The full legal ramifications seem very fuzzy and I'm not sure I would invest in this without clearing up some of those questions.
Thanks Shaun. My thoughts exactly. I just have too many questions right now, and not enough answers. What I'd really like is a list of people who have done this that I could talk to in order to get their opinion, but that may be wishful thinking. One other drawback I have is that even though there is a list of properties available, it seems a bit small.
Hey guys, this is Tony from REI-Exchange.com. It's funny to see comments about our site on here!!
Let me answer a few of your questions, feel free to post this to your front page if you like.
The property is put into a Land Trust. The title shows the trust. You as an investor are sold rights to shares of the trust. In a legal dispute you could not be held liable.
When a deal goes South, we kick out the Lease-Option holder in the home and flip the property. Properties all have 20-35% equity in them.. So downside is actually a good thing for investors.
As for the size of the list, we are adding 3-4 per day. They are being financed then go off the list.
Any questions, please email or hit the site. www.rei-exchange.com tony@tmg-ventures.com
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