Comments on: Ray Lucia Is Wrong on REITs

By: Allen Novotny

Allen Novotny — Mon, 01 Apr 2013 19:25:05 +0000

I bought into Beringer Harvard I reit about 7 years ago. I had an excellent return until the downturn in 2008 and my monthly check went from $1500 per month to $200 a month. The share value went from $10 to $4.50. They told me not to expect any recovery for 5 years. Two years ago I read that commercial property was turning around so I was pretty excited until The reit told me a couple of months ago that the value dropped almost another .50. How do you figure that? I called them and they gave me some cock and bull story. I made the mistake of listening to my financial adviser who highly recommended the reit. We, as investors don’t need the snide remarks I’m reading here. Not everyone is an expert on investing. I no longer have that investment advisor.

By: Ron Ak.

Ron Ak. — Thu, 22 Nov 2012 19:22:24 +0000

Good. For some truly good advice, see accountant Sapp’s Q&A with Hettena – his 8 points of advice re: REIT’s. These are excellent points for ANY investment too.

By: Randy

Randy — Thu, 22 Nov 2012 19:09:44 +0000

If the term “non-traded REIT” is not enough to raise questions in the heads of anyone thinking of investing in them – they deserve to learn the hard way. Any anyone considering making ANY investment of a material percentage of net worth – without consulting a second financial adviser (or especially even a non-CFP CPA for example) – has s… for brains. The problem is that such investors are greedy and want to think only of bucks down the road.
I have never heard his radio show fail to comment about the lack of liquidity when he speaks about them…

By: Bucket Head

Bucket Head — Thu, 06 Sep 2012 20:10:22 +0000

Joe is Ray to the 1/2 power. He is either 1/2 as smart or twice the crook. Think about it.

By: Bucket Head

Bucket Head — Thu, 06 Sep 2012 20:08:51 +0000

Irony is lost on most. It is a Bucket Shop. 99% of people ar not familiar with the term. That is why these things work. Nothing is new. It is just new to the biggest sucker. The guy should go to jail. He says hey here is all you have to do to become really rich with no risk, here are the numbers to back me up. Based on invalid inputs that prove he is either a crook or really dumb. Your comment about the Bucket Shop makes me want to go read Reminiscences again. The guy is just selling snake oil. The fact that a small portion of the peoplein the country believe him does not change the fact he is a con man, in my humble opinion.

By: Bucket Head

Bucket Head — Thu, 06 Sep 2012 19:56:58 +0000

The guy puts little old ladies in double digit digit commissioned, thinly traded REIT’s that are run by? likely someone that is a buddy of RJL. Sounds like a scam to me. The major brokerage houses did it in the 80′s and 90′s, they actually valued things at $10 forever also. It was a scam then and it is a scam now. The kid is just following in the footsteps of dear old dad. I would love to hear how many times someone at Lucia’s Bucket Shop talked to prospects about the term return of capital. Logic will tell you that if you invest your money in vehicles that return squat, have high fees and are iliquid that his projections about growth of principle and income payments are nonsense. Go to the guys website he refutes the SEC charges with a bunch of nonsense. He is being charged with using bogus numbers to calculate how much your original pool of assets would be worth down the road. Instead of using actual past inflation numbers for the 1970′s, numbers that are readily available, he used 3%! In 1973 inflation was 8.8% and went to 12% later in the decade. By 1980 inflation was 14%. It took me less than one minute to get those figures. For someone that professes to be a financail expert to not realize how fradulent his figures are they would have to be as dumb as dirt. So, if you are a supporter of RJL you have to believe he is either stupid or a crook. If he is stupid you can’t be too bright for listening to him, if he is a crook, God help the both of you. Do some reading on these non traded REITs and the return figures of annuitites. See how much of your cash flow from your annuity is just the return of your principle. The answer on long term anuities is over 95%. So, this guy goes on the radio and answers a ton of questions and then bangs people for 10% of their net worth after meeting with them for an hour, or actually meeting with some other mouth breathing rep, sounds like a hell of a way to make a living to me. If you are a scum bag!!!!

By: Rich K

Rich K — Wed, 05 Sep 2012 23:58:25 +0000

If his advice was any good, he’d be following it to increase his own wealth rather than earning a supplemental income by running seminars and hosting radio shows. This sound analysis applies to more than poor RJL and has served me well as I have been self taught to avoid scammers and do my own howework.

By: "dolly"

"dolly" — Wed, 05 Sep 2012 19:55:14 +0000

I knew one of Lucia’s key employees. The guy made a decent salary, had some decent skills, took an interest in building wealth, but his personal finances and his own financial situation were a mess despite trying to turn it around. hmmmm.

I guess some people will say, “so what: my doctor smokes like a chimney.”

…still.

By: AJ

AJ — Wed, 15 Aug 2012 22:49:56 +0000

The “Buckets of Money” strategy is a way to organize your investments so that money you need in the near term (1-7 yrs) is kept safe and liquid (Buckets 1 & 2) while money not needed until much later (15 yrs or more)is invested in less liquid and/or potentially riskier vehicles that can produce higher returns for long term growth (Bucket 3).

REIT’s (traded or non-traded) are just one asset class that you may or may not want to invest in. A non-traded REIT would be put in “Bucket 3″, which is for money not needed for a long time (15+ years)and doesn’t need the liquidity as a Bucket 1 or 2 investment does.

In his book “The Buckets of Money Retirement Solution”, Ray Lucia Sr. advocates owning a few nontraded REITs as well as public REITs and talks about how both types together give the investor diversification, income and growth. He discusses the pros and cons of each type, their risks, liquidity and suitablility. He also fully discusses commissions, loads, investor costs in both nontraded and public REITs. You didn’t mention any of this. Why?

As Mr. Sapp states in A Professional’s View…, “I should also add that nontraded REITS are not unsuitable for every retail investor, just most of them.”

So if you think an investment is not suitable for you, don’t buy it. If you don’t understand it, don’t buy it. If your advisor tries to sell you something you are not comfortable with, get a new advisor.

If “Joe” is approaching retirement, the “Buckets” strategy would have him put most or all of the remaining 70% of his portfolio ($186,000) invested in safe, liquid vehicles for at least the next 14 year period. Why didn’t you mention this and why does Joe think he needs to sell the REIT’s now (which aren’t intended to be sold for 15 years) instead of his more liquid investments?

As for Joe’s wife, she should’ve protected her income with a disability insurance policy so she wouldn’t need to tap into their retirement funds prematurely if fallen ill. Was this recommended by the advisor and the advice ignored? My advisor (not RJL!) recommended adequate disability insurance during my very first meeting with him and I believe this is standard for any financial plan. In fact, I’ve never seen a financial plan checklist by any advisor that omits it.

I’m not trying to defend RJL here, but think there is way more to this story that was purposely not disclosed and wonder why so much of it was left out. Stinks of an ulterior motive.

By: CallMeIshmael

CallMeIshmael — Tue, 14 Aug 2012 15:39:01 +0000

They don’t call this a “Bucket Strategy” for nothing. These scams often give the game away right in their name. This is a “Bucket Shop” which means there’s no market in the securities they’re touting. You’re betting against your broker since he’s the only market maker in the stock. That’s why Ray Lucia is not a Registered Representative. He doesn’t want the possible criminal liabilty he’d face if he were. Anyone stupid enough, ignorant enough, or negligent enough not to do their homework is a sucker. Caveat Emptor.