There are several types of investment in United State and one not so well known to investors is the real estate fund. Relatively new, it is regulated by the capital market, representing a share of investments made on the Stock Exchange. In today’s post, we will see this type of investment in more detail and you will be able to identify if real estate funds are suitable for your investor profile. Check out!
What are real estate funds?
Investing in real estate funds is different from investing in real estate. This is because real estate funds are just fractions of real estate that are acquired by investors in the form of shares in investment funds.
This means that the investment procedure, that is, its transformation into currency, can be carried out with a much shorter delay than in real estate properties. The minimum amounts to be invested are also substantially lower, being possible to invest $5 thousand and leave this amount allocated to several different properties.
How real estate funds work
Real estate funds work like any investment fund, seeking investors with common interests. In this case, the objective is to invest in the real estate market, serving as a financial contribution to projects of the most diverse prices and standards, which guarantees greater portfolio diversity, even investing only in one fund.
After the property is handed over to the owners, you will continue to earn the proportional amount of rent, for example, even if you do not own a property, but rather a share in a real estate fund.
Advantages of real estate funds
As the real estate fund is managed by a financial institution supervised by the Securities and Exchange Commission , this represents more security for the investor, as it is an investment with high risk and is listed on the Stock Exchange.
Earnings from this modality are not subject to Income Tax, which makes them very attractive, especially in the long term . This is his main differentiation: the deadline. The longer the money remains invested, the better it will be for the investor, as the tax difference will be greater.
Another advantage is the selection of tenants for managed properties. There are large companies that will rent these properties and with contracts of several years, and the property will hardly be vacant, generating only expenses for the fund.
Thus, when a large corporation seeks a property of this size, it is good for both sides: for the company, which does not need to spend a lot of money to immobilize its physical structure, and for investors in real estate funds, which guarantee a very high tenant standard, also guaranteeing the continued financial return for the fund.
Steps to invest in real estate funds
Ideally, you should invest long-term funds in real estate funds, as liquidity is not necessarily immediate; it depends on the sale on the Stock Exchange. To invest, you must register with a stockbroker and select the most appropriate fund for your profile.
Subsequently, an order is sent to the broker, specifying the number of shares to be purchased. From that moment, you are already an investor in real estate funds, enjoying all the advantages of this type of investment.
Of course, you are not purchasing a property, but only purchasing shares of real estate funds. That way, you are already aware that the market can swing both up and down and it is important that you study the situation before entering a fund. Still have questions about investing in real estate funds? Leave a comment, participate!
Posted by: John Labunski Dallas