What are the advantages of investing in real estate funds?

What are the advantages of investing in real estate funds?

There are different investment funds available on the market, including Real Estate Investment Funds, which do not require the purchase, sale or lease of the property. Which are the benefits of investing in real estate funds?

In this article, get to know the differences between the investment funds real estate and the furniture, os types of real estate funds that exist and the benefits of investing in this type of instruments.

Real estate versus securities: what are the differences?

First, it is important to demystify the concept of investment funds. These are instruments that pool investors’ savings for the purpose of investing them in assets. The objective is, above all, to make the gains higher than they would be if the investor acted individually.

The management companies of Collective Investment Undertakings manage investment funds and within this type of bodies there are:

  • Undertakings for Collective Investment in Securities: refer to funds that invest mainly in shares, bonds, liquid financial assets and other securities.
  • Real Estate Investment Undertakings: include Real Estate Investment Funds that invest, especially, in real estate and real estate assets.

There are several types of Real Estate Funds but, according to the Portuguese Association of Investment, Pension and Heritage Funds (APFIPP), the most common are identified as closed-end fundsin which the subscription is made at a certain time and the redemption is only possible when the fund is liquidated.

What types of real estate funds are available?

The different Real Estate Investment Funds they differ with respect to the variability of capital, subscription and remuneration. In this sense, there are six examples you should know about.

open funds

In this option, the funds have a number of participation units that varies according to demand market.

closed funds

On the other hand, they have a fixed number of units, which is set when the fund is issued.

public subscription

As its name implies, public subscription takes place when it is carried out through the Public Offering.

private subscription

On the contrary, this type of subscription takes place when is not in the Public Offering regime or, even if it fits, when a particular subscription is requested according to specific rules.

income funds

One of benefits of investing in real estate funds based on remuneration is the fact that, periodically, the investors have access to the income obtained.

It is important to note that the income earned varies depending on the change in property prices and the rental market.

Capitalization funds

In capitalization funds the incomeinstead of being distributed, are reinvested.

6 advantages of investing in this type of fund

Get to know now what are the advantages if you want to start investing.

  • Investment amount: the amount needed to invest is inferior against the market value of a property;
  • Liquidity: although there are exceptions, the investor faces a period of lower settlement compared to a situation of sale or purchase of a property;
  • risk diversification: the fact that these instruments invest in different numbers of assets, ends up dispersing the investment risk;
  • Greater investment securityas it is made and managed by professionals;
  • Access to investments that could be inaccessible on an individual basis;
  • Transparency: the entities involved transmit information on a regular basis.

And what are the disadvantages?

As in most situations, here too there are disadvantages that may be related to the loss of capital that was investeda price variation market and, finally, with the ignorance of earnings and liquidity.

Therefore, it is important to mention that you must take into account several aspects before investing in Real Estate Investment Funds, since there is no guarantee of the capital invested.

Finanças pessoais,Investimentos
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