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REAL ESTATE – Important To Own In Your Investment Portfolio

Real Estate Ownership

It is no secret that Real Estate has been the greatest wealth builder with the least fluctuations in history. Real Estate is not just a hedge investment during the fall of the stock market but a solid investment in all stock market cycles.

Carefully selected Real Estate properties with proper due diligence and sound financing structure will deliver real long-term value through income and capital appreciation. 

Unlike the paper investment of the bond and stock markets, the long-term value of Real Estate in your investment portfolio is backed by physical assets and is not subject to wide fluctuations that are part of investing in the stock markets.

A properly structured and managed real estate portfolio can provide a return on your Real Estate investment in excess of 10% per year even when markets are down or flat. 

Why is not everyone investing in Real Estate ….? 

Real Estate development and income properties opportunities have been reserved over the centuries for wealthy families, investment bankers, conglomerates,s and insurance companies. This was due to the high barrier of entry. 

 What are the Barriers?

  • Capital
  • Knowledge

To buy raw land to build and sell for profit or to build and rent for the income you will have to purchase the land that would set you back at least $10M plus then you need to hire a professional team; planner, architect, engineers, surveyor, valuator, and quantity surveyor, this will cost between 6% to 8% of the total cost of construction which the banks won’t finance so you must have this capital to invest into the development.

Then to get bank financing you must have minimum 20% equity of the total cost of the development. 

So how can an individual with limited capital and limited skills in Real Estate development get involved? 

By creating bite-size deals which become part of the larger deal

There are already mechanisms and legal frameworks in existence that allow like-minded investors to band together to purchase and control substantial investment properties. Of course, each carries its own advantages and disadvantages. 

A public newsletter published by BDO Seidman, LLP, Accountants, and Consultants, asserts: “The syndication process—aggregating capital from a group of investors to acquire a property— is seeing new popularity as real estate increasingly is viewed as a fourth asset class in addition to stocks, bonds and cash. Real Estate Investment Trusts (REITs) are an attractive way to invest in real estate, but their publicly traded shares are subject to a significant degree of price volatility that many investors seek to avoid. By contrast, shares in a private syndicate, typically real estate limited partnerships (RELPs) or privately held REITs, are not priced to market on a daily basis and in addition, offer the possibility of higher returns than publicly managed real estate. Finally, private syndicates offer some tax savings unavailable when investing in a public company.

Private Real Estate Syndications are where you are pooling your capital with that of other investors for the purpose of investing in larger and more lucrative real estate projects. This affords the average investor an opportunity to participate with an organized group of like-minded investors in the ownership of a Real Estate property that is too much to handle singly or in a joint venture with just one or two others.

Real estate syndicates can own development properties, income-generating residential or commercial real estate and they are secured by tangible assets as collateral. This characteristic is untrue of many other investments and provides added security for your investment. Additionally, investing in private real estate syndications provides the individual investor the ability to achieve higher profits with lower risk than the average equity investment. 

REAL ESTATE INVESTMENT TRUSTS (PRIVATE), REAL ESTEAT LIMITED PARTNERSHIP, UNDIVIDED INTEREST OWNERSHIP and GROUP SHARED APPRECIATIOIN MORTGAGES are all forms of syndicated ownership that can be used to buy and hold Real Estate investments.

DON’T WAIT TO BUY LAND….BUY LAND AND WAIT…. Will Rogers.

 

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