I recently received the following in an e-mail message:

>>
My husband is a Broker and I am a Realtor. We are very interested in more
information about REIT's (Real Estate Investment Trusts). There is a
attorney my husband is speaking with in regards to this, but we also wanted
to get further education through you if possible.  Are there any specific
Seminars you hold in regards to this?? If not maybe you can refer me to
someone I can network with. Your help is greatly appreciated.
<<

Here is my reply:

A REIT is a sophisticated "group investment." Group investments can have
different legal structures, benefits, and consequences.

There was a time in my real estate career when I was involved with
investment groups or what we called "real estate syndications." I
participated as a consultant to limited and general partnerships, broker to
partnerships, and as both a limited and general partner in a number of real
estate partnerships. I current continue to be involved in a general
partnership I have been involved in for 27 years (with my real estate
brokerage partner and two high school friends). The assets of the
partnership are a 5 bay coin operated carwash and two adjacent parcels
(single family homes). This general partnership has a formal partnership
document created by an attorney specialist, and is successful because the
investments are sound and the partners have trust and respect for one
another, not to mention a long history as close friends. General
partnerships are not suitable for everyone.

There are no seminars that I know of on the subject today that I would
recommend. There were years ago, especially as real estate investing
benefits were amplified by the Economic Recovery Tax Act (ERTA) in 1981.
There were also books on the "whys and how tos." In the early 1980s I worked
with and attended seminars with an attorney, author, seminar promoter and
syndicator named Mark Long. Mark wrote "Big Money Brokerage, Volumes I and
II." It is out of print but I googled and found the following:
<http://www.biblio.com/search.php?tid=0&auid=0&stage=1&author=Long+Mark&titl
e=BIG+MONEY+BROKERAGE>. It will provide a decent "primer" on the subject.

Each investment group provides opportunities to acquire properties which the
individuals would not have the ability to purchase on their own. Tax law and
the "active participation rule" limit some of the immediate tax benefits
which were available to investors of 20 years ago. That being said, getting
groups together to invest in real estate can still be a great career path
for competent real estate professionals.

There are different investment group structures.

1. Partnerships - Tax consequences are passed through to partners and taxed
at the partners tax rates. There are General Partnerships and Limited
Partnerships.

A. General partnerships - All the general partners have unlimited liability
(Joint and Several Liability) and because all general partners participate
in the management of the partnership and its assets, General Partnerships
can be difficult to manage.

B. Limited partnerships - Have two classes of partners, General Partners and
Limited Partners. All General partners are responsible for the management
and control of the partnership and its assets and have unlimited liability.
Limited partners liability is limited to their investment and they have no
control over the partnership or its assets. There are two types of limited
partnerships, Private Placements and Public Placements.

1) Private Placements are the least regulated of the two and have the lowest
legal and compliance requirements and consequently, the lowest legal fees
and costs to put together. When creating a limited partnership, the total
number of "unqualified investors" is 35 (last time I worked in this
area...it may have changed so check first). The marketing of the investment
opportunity must be private and to people you know or with whom you have a
pre-existing relationship. There are "specified offerings" and "blind pool
offerings." With specified offerings, the general partners acquire property
or the rights to property and then market the interests in the partnership
with the property and its specifics outlined in the prospectus. With Blind
pools, the general partners may create a profile of the property type they
intend to acquire and investors invest without knowing the ultimate property
to be owned.

2) Public Placements require more legal, registration, compliance and
disclosure (and expense) but the offering can then be made to the "public,"
making it easier to raise more money from more investors (not limited to the
number or type of investors).

2. Real Estate Investment Trusts (REITS) - A REIT is a corporation (lots of
legal, compliance and disclosure requirements...and expense) which must
invest its assets in real estate and has the liability characteristics of a
corporation...limited liability of all investors, and tax consequences are
"passed through" as they are in partnerships. Partners can offer their
shares for sale to other investors and REITS are typically more liquid than
partnership investments.

3. Limited Liability Companies - Specific to the laws of your
state...similar to a corporation investing, which limits liability of all
investors.

4. Joint Ownership (Usually Tennant in Common Ownership - This is where
several parties might own a real property asset as Tenants in Common. This
is sometimes done informally, with the deed being the only document
indicating a "partnership exists." Make sure you have an attorney create
some sort of "land holding agreement" which stipulates what happens "if," if
a partner wants out, if a partner dies, etc.

When should you use one of the above over the other? One rule of thumb could
be the amount of money you plan to raise. I would say REITS are in the 100
Million Dollar range, Public Placements in the multi million dollar range,
and Private Placements in the multi hundred thousand dollar range.

When you take other people's money and make investments for which they have
no management control, you are more than likely dealing in a "security" and
securities laws come into play. Be very careful and engage the services of a
good attorney who has knowledge of these things. Investor communication and
management is very important, as is managing the expectations of the
investors.

Saul