Private real estate investing has become increasingly popular as investors look for alternative investments outside the stock market. In 2018, private real estate investment in the United States totalled $579 billion, up from $553 billion in 2017.
Private real estate investments can be made through various structures, including limited partnerships, joint ventures, and limited liability companies. Investors in private real estate may be individuals, pension funds, insurance companies, or other institutions. Private real estate funds expose investors to a diversified portfolio of properties and offer potential tax benefits, although there are also some risks to consider.
Here's all the information you need to know about private real estate investments.
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In the United States, a private real estate investment is an investment in real property held by an individual or group rather than a government or financial institution. Many people have heard of investing in the stock market or real estate properties, but private equity real estate investing combines elements of both.
Instead of purchasing individual properties, a private equity real estate investor typically invests in a private equity fund that acquires and manages various commercial properties such as office buildings, shopping centers, and hotels.
These funds often make money through rental income and increasing the value of their properties through renovations and the improved economic conditions of the surrounding area. Unlike publicly-traded REITs, these funds are not available on the stock market and must be directly approached by an interested investor.
Typically, only high-net-worth individuals or institutions have the financial resources to invest in private equity real estate, but these assets can be a profitable way to diversify a portfolio and generate steady returns over time.
When it comes to investing in real estate, various options are available. Two popular choices are real estate investment trusts (REITs) and real estate funds. Both offer the opportunity to diversify and invest in properties without buying and managing them yourself.
However, there are some critical differences between the two. REITs are publicly traded on the stock market, while real estate funds are typically private, with a fixed number of shares offered to investors. REITs often own and operate multiple properties, whereas a real estate fund may focus on one specific property or project.
Additionally, REITs often have high liquidity due to their public nature, while real estate funds tend to have longer holding periods and limited liquidity. Choosing between a REIT and a real estate fund ultimately depends on an investor's individual goals and risk tolerance. It's essential to weigh the benefits and drawbacks of each before making a decision.
Investing in private equity real estate can offer significant returns, as these investments tend to appreciate in value and generate income through rental payments. By pooling funds together, firms can invest in high-quality properties due to the substantial pooled capital. Private real estate investment trusts are also highly diversified since firms can afford to invest in various types of properties.
However, these investments can be reasonably illiquid since they often involve long-term commitments and may require major renovations or significant property management. In addition, there are high barriers to entry as these types of investments typically require a large amount of capital.
As with any investment, it's essential to thoroughly research and weigh the potential risks and benefits before deciding. Overall, investing in private equity real estate can be profitable for the right investor who is prepared for the potential challenges.
Private real estate investing can offer potential tax benefits and exposure to a diversified portfolio of properties, but there are also some risks to consider. If you're considering investing in private real estate, it's essential to research different types of investments and understand the risks involved before making any decisions.
Saint Investment offers access to private real estate funds with high returns and flexible options. It's a safer way to invest in real estate because you are assured of secured investments in real estate properties vetted by experts. This takes out the guesswork and meticulous evaluation required to identify profitable properties.
Get in touch today to learn how you can take advantage of this investment opportunity.
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.