Real Estate Investing By Real Estate Fund: Prior to the onset of the industrial revolution, wealth and power was measured primarily in terms of the amount of land owned by an individual or family. Although the twentieth century saw the rise of securitization and the resulting increase in stock and bond ownership, real estate investing can still prove a profitable option for those who are actively engaged in an asset allocation program or just looking to diversify their current portfolio. Real estate investment trusts, or REITs, can be a convenient way for the average investor to profit without the hassle of direct property acquisition. Advantages of REITs: 1. Professional management: In most cases, the investor that buys a rental property is left to her own devises. REITs allow the investor the opportunity to have her properties managed by a professional real estate team that knows the industry, understands the business and can take advantage of opportunities thanks to its ability to raise funds from the capital markets. 2. Limitation of personal risk: REITs can significantly limit personal risk. How? If an investor wanted to acquire real estate, it is likely he will take on debt by borrowing money from friends, family, or a bank. Often, he will be required to personally guarantee the funds. This can leave him exposed to a potentially devastating liability in the event the project is unsuccessful. Purchasing a REIT, on the other hand, can be done with only small funds as share prices are often as low, if not lower, than equities. An investor that wants to invest Rs. 10, 00,000 in real estate will reap the same rewards on a pro-rated basis as those who want to invest Rs. 10, 00,000; in the past, it simply wasn’t possible to get this kind of diversification in the real estate asset class without taking on partners or using leverage. 3. Liquidity: Unlike direct property ownership, a REIT offers liquidity and daily price quotations. Many investors mistake this for increased risk. After the average real estate investor has acquired a house, apartment building or storage unit, he becomes primarily interested in the future rental income prospects, not the potential sale value of the asset if he put it back on the market. 4. Excellent tools for retirement or income for living expenses: REITs are also especially suited to retirement portfolios because the cash dividend not only provides income upon which to live, but establishes a phantom floor to the share price. In a market free fall, for example, the dividend yield will eventually become attractive enough to prevent further sell offs (assuming the fundamental business isn’t in jeopardy.) This can result in greater stability at times of market crises. REIT refers to a corporate entity that is engaged in the acquisition, management, building, renovation, and sale of real estate. This type of real estate investment trust offers the greatest potential of reward and as such tends to be favored by professional money managers. Equity REITs often operate in a specific area of expertise. Investcare team will help you in Real Estate Investing By Real Estate Fund..
Posted on: Fri, 27 Sep 2013 08:41:24 +0000
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