Are you considering adding a real estate investment to your portfolio? If the answer is yes, chances are you already recognize the value associated with making this kind of investment. Real estate offers an alluring combination of high returns with relatively low risk. Not to mention, you can see your investment (if you really wanted to). For some, being able to connect their investment with a piece of land, can provide a level of security, unlike any other investment. Both new and advanced investors can agree, real estate investing, can provide a manageable, steady way to earn an income stream and more often than not, a fortune. Since the concept of real estate is relatively simple to comprehend, it may be an ideal option for many looking to grow their wealth. An investment in real estate can be accessible to all kinds of investors. For those looking for more of a passive investment in real estate, here’s a breakdown of two popular options: REITs and LPs.
If you are an advanced investor looking to invest long-term…
Real Estate Investment Trusts (REITs)
REITs are real estate investment companies that own and usually operate incomeproducing real estate, or mortgages. Similar to stocks, they offer an investment opportunity by selling shares of properties, mortgages, or loans.
Depending on your preference of investment, you can choose from traded or non-traded REITs. Non-traded REITs may be purchased through a participating broker, REIT mutual fund, or REIT exchange-traded fund. REIT securities that are traded on major exchanges, however, may only be purchased through a broker.
What makes REITs attractive to investors is the fusion nature of the investment — they act like stocks in terms of high yields, but are not necessarily in sync with the stock market, per se. Because these are investments made in commercial properties, the daily quoted resale value may vary according to fluctuations in the real estate market.
Additionally, only traded REITs offer liquidity at the daily quoted resale value. Investors should remember that non-traded REITs are not easily liquidated and should only be considered for long term investment goals. For those investors, who are more advanced, adding REITs can help diversify a portfolio. Despite high, up-front fees and steep commissions, REITs continue to be a great way to passively invest in real estate.
If you are a new, or advanced investor looking for a liquid investment in real estate…
Limited Partnerships in Real Estate (LPs)
A real estate investment company may use LPs for the purpose of a business venture in real estate, which can range anywhere from funding commercial developments to mortgage lending. This legal structure, allows for a general partner, who runs the daily operations of the business and multiple limited partners, who are strictly liable for their capital investments.
LPs offer the flexibility of earning higher yields on both your short-term and long-term investment goals. These terms may vary according to several factors including the company’s (general partner) offering, the purpose of the venture and the nature of the industry. However, LPs are a non-institutional financial product that can earn you higher returns, while still remaining highly liquid as an asset — making it an ideal alternative investment vehicle for all investors. Our fund, provides investment term options of as little as 6 months, up to 3 years, with the option to renew your investment at the end of your term.
LPs are a successful investor’s best kept secret. What makes LPs attractive? Primarily, the high yields (upwards of 6%) and limited liability. LP investors (also referred to as limited partners) can expect to receive a stream of the partnership’s income and expenses, without being liable for debts incurred by the business (general partner’s liability). Considering the money you save in broker fees and commissions, LPs can also diversify your investment assets, while offering higher earnings and relatively low risk.