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Many investors see the value in diversifying their portfolio, and often, real estate investing is a desirable method of achieving this goal. But one of the primary drawbacks to investing in real estate is the necessity of dealing with renovations or renting to tenants, which removes the passive element from the investment equation. Further, directly investing in individual properties like single-family homes or small apartment buildings requires expert knowledge of the local real estate market, further increasing the overall risk profile of the investment.
To avoid such undesirable asset traits, new ways to own a stake in real estate were developed by creative investors. One of the earliest of these innovations is the Real Estate Investment Trust, or REIT.
If you’ve been considering investing in real estate, you’ve almost certainly seen REITs talked about on the internet and on TV. To provide you with a better understanding of whether or not investing in a REIT is right for your goals, we’ve put together this beginner’s guide to REITs. Let’s dive right in and discover if REITs make sense for you and what alternatives might be a wiser choice.
REITs have become a fairly well-known way to invest in real estate without the need to scrutinize prospective tenants and deal with landlord maintenance headaches. Essentially, REITs allow numerous investors to buy into a collection of real estate assets much the way people invest in mutual funds that hold stocks in their portfolios.
REITs enable investors to purchase and improve real estate assets that would otherwise be totally out of their financial means to access. Much like mutual funds, investment shares in most REITs can be publicly traded. This has the advantage of typically much higher liquidity than other methods of Real Estate Investment.
While there are many merits to REITs, there are drawbacks to be aware of that may influence your decision to invest in them. A major drawback of investing in REITs is that you’ll have very little insight or input into the types of real estate that’s being invested in by the operators. Further, you’ll get little feedback on larger details or strategy of how properties are being maintained and the strategies used to assess risk. Lastly, because REITs are publicly traded, they’re a less secure hedge for your portfolio than a more privately-held position in real estate, such as a real estate investment fund like Saint Investment Group operates.
One alternative to REITs that have fewer drawbacks for investors is the real estate investment fund.
Like REITs, real estate investment funds combine the capital of numerous investors seeking ways to diversify their portfolios through real estate investing. But where REITs differ from real estate funds is the level of insight you’ll be provided with on a regular basis, along with often being a far more effective hedge against stock market volatility.
Unlike a professionally operated real estate fund like one from Saint Investment Group, a REIT is a legal entity that is traded in pieces in shares of stock. A REIT can be a corporation, trust, or association that directly buys real estate.
Conversely, real estate investment funds are structured much differently, usually providing monthly income payments that are calculated using a fixed percentage of the total capital invested. Yet another merit of investing in real estate funds with Saint Investment Group is that you’ll have the ability to reinvest your monthly dividend payments back into the fund, raising your share in the fund and increasing your potential monthly passive income.
Most importantly, real estate funds can offer far greater transparency about the types of real estate being included in the fund. Fund operators also provide you access to far larger commercial real estate investment deals than would otherwise be financially feasible. Saint Investment Group is a professional real estate fund operator that delivers unmatched insight about the properties your hard-earned capital is being invested in and why.
Many investors find real estate appealing because of the passive income potential, but this usually comes with the burden of being a landlord or managing properties directly. A downside to REITs is that they typically aren’t a solid choice for passive income but instead buy-and-hold investment objectives. If passive income is your ultimate goal, but you’re not keen on directly dealing with properties and tenants, a real estate fund from Saint Investment Group is often your more effective option.
The income earned from investing in real estate funds is one of the most passive ways to earn real estate income. Similar to owning rental property, real estate funds can provide investors with a steady, dependable stream of passive income but with far fewer risks and physical work involved. Professional real estate fund operators handle every detail of investment property ownership, from acquisition to maintenance to tenant transactions.
Saint Investment Group rigorously analyzes each real estate investment we select. We curate our real estate to include a range of property types, each carefully chosen to balance risk and deliver lasting stability.
Our real estate portfolio includes properties such as:
When you think a real estate fund will fit your investment objectives better than a REIT, Saint Investment Group is here to guide you with our extensive real estate experience. The team of seasoned real estate investors at Saint work diligently to curate premium investment opportunities for our fund to ensure stable, predictable returns year in and year out. Call (323) 483-0291 today for your free real estate consultation to discover the difference Saint Investment Group can make for your portfolio.
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.
