What You Must Know About Real Estate Funds

Investment in stocks and Mutual funds work towards a same clause and offers an alternative avenue for the investor which expands over all assortments. Like stocks, RETIs (Real estate Investment Trusts) or real estate funds also works towards to maximize the returns of investors. Real estate investment comprises of two clauses, if the value of the property declines the Real estate home owners should face the problems same as individual stock investors. But, realty investors have an alternative option of investing in Real Estate Funds.

Compared to other types of real estate investments, real estate funds allow investors in to commercial, rental and corporate properties such as Malls, skyscrapers, corporate office buildings and many others. Here are the risks and benefits of investing in Real Estate Funds.

A real estate fund is a professionally managed portfolio holding diversified properties. This allows small investors to earn high yield from real estate property. This type of fund is pooled for investors to invest in real estate investment trusts directly or indirectly. Like stocks, real estate funds can invest overseas, domestically or both. The key feature for these funds is, if the investors do not have an ample asset to take part in commercial real estate, unlike stocks, the investor can be purchased as individual share at a reasonable price.

For whom the Real estate funds are suitable:

The real estate funds are recommended for investors who have a medium to long term investment horizon and who wish to pay out the full amount required to purchase real estate assets, manage a property and to concentrate all the funds in a single asset.

Advantages of real estate funds:

Affordability: To enter a real estate fund the investors no need to have a lot of money. Few are launched with minimum requirement. Once the fund has been launched, the investors allow buying units like stocks. By this way, without investing a substantial amount to acquire a share property, the investors can partake in the income from a large scale property.

Diversification: Once the investor invests in real estate fund, he will become the owner of a share in the asset. As the large mass of the fund is invested in several properties like residential, commercial and rental properties, the concentration risk is limited. Most funds focus on a single property, mostly on rental property. In this case, the professionals rent out the property and collect the money and distribute the returns to investors.

Expediency: The targeted real estate asset will be maintained by professionals, including buying and selling the property, maintenance, finding tenants, paying taxes and many others.

Flexibility: The investor can enter and exit a fund in three easy stages. When one trade in real estate funds units on exchange, the account will be credited or debited in three days after closing a transaction.

Tax Benefits: This is one of the considerable advantages compared with other types of investments. If the investor meets certain requirements, there will be an income tax exemption as an individual investor. The fund distributed from the rental property, shares in the proceeds is only considered for tax exemption.

Transparency: At any time, the investor can check the value of investment property and can find clients those who are interested in buying and selling out fund units by going through online.