Real Estate

Ultimate frontier market? Amid thaw, Chinese eye North Korea real estate

Ultimate frontier market? Amid thaw, Chinese eye North Korea real estate

Chinese property speculators are starting to bet on a rapid improvement in relations between North Korea and the rest of the world, pushing up prices in the border city of Dandong and even spurring buying interest in the world’s most isolated country.

Seven Smart Investment Vehicles To Add To Your Holdings

From Forbes.com

Most investors know that a diversified portfolio spreads out your risk and keeps your returns afloat if one of your investments takes a nosedive. The question then becomes: Where are the best places to invest your money?

While the stock market offers plenty of options for diversification, it's wise to look beyond Wall Street and find other investment vehicles with solid yield potential. We asked members of Forbes Finance Council to share their thoughts on the best holdings to add to your portfolio. From cryptocurrency to health savings accounts, here's what they had to say.

1. Life Insurance
2. Self-Directed IRAs
3. Online Businesses
4. Cryptocurrency

5. Real Estate Investment Trusts
6. 401(k) Account
7. Health Savings Account

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Internal or External Management in Real Estate Investement Trusts (REITS)

From Forbes.com

REITs are either internally managed, with management as employees, or "externally managed", pursuant to a management contract, with no direct employees.

Usually, private REITs (or non-traded REITs) are externally managed for a fee by a related-party manager. The related party fees for these types of vehicles can be significant, and will vary based on the underlying investment premise and management services rendered.

In a REIT with an internal management structure, its own officers and employees manage the portfolio of assets. Conversely, a REIT with an external management structure usually resembles a private equity arrangement, in which the external manager receives a flat fee and an incentive fee for managing the REIT's portfolio of assets.

There has always been a debate over which management structure is most favorable, and the controversy seems to always center on conflicts of interest. Let me explain.

When you buy shares in a publicly traded REIT that is internally managed, you are providing capital (or equity) to the company to invest in buildings and pay the overhead (including salaries) for the business. So, theoretically, as an investor I am paying for the salaries of the management team.

However, when you buy shares in an externally managed REIT, you are not actually hiring the management team. The Board has negotiated a contract with an outside management team to run the business, and typically, their compensation is tied directly to growing assets under management, much like the private equity model.

 

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