real estate real estate is also considered an alternative investment direct investment means buying a stake in a specific property which can be a single asset or a portfolio of assets fund investing means investing into a fund which then invests on behalf of many investors the funds manager finds projects which meet pre-established parameters.
Advantages of direct investing include investors have a greater control and decision making and can choose the asset according to criteria such as location asset type and strategy with full transparency of information and access to expertise advantages of indirect are for example with a hundred thousand dollars. It would be likely hard to make a direct investment in most cases of real estate assets, but you can easily buy into a fund with that amount and you can also get your money out of the fund a lot more easily than having to sell the underlying asset and the 100,000 will be Diversified across a portfolio of assets. The pool is professionally managed and as a result of not owning specific assets, there is less liability.
Within the direct and indirect framework real estate investing may take a variety of forms real estate Investments may be classified along two Dimensions debt or equity-based.
And in the private or public markets Equity Investments that occur in the private markets often conclude as direct investments in real estate REITs or real estate investment trusts are publicly traded shares of portfolio properties.
Similarly mortgages may be packaged and securitized into asset-backed securitized debt obligations, for example, MBS or mortgage-backed Securities that represent rights to receive cash flows from portfolios of mortgage loans. Each of these can be broken down further into categories of real estate that include residential generally single-family and multifamily homes or commercial including office retail industrial warehouse and hotels which each have their own unique Dynamics.
Real estate in general offers a distinct Investment Portfolio as it is hybrid in nature reflecting the features of both bonds and equities.
A large portion of the Returns on real estate come from rent payments which are usually fixed in the short term like a bond.
Similar to stocks real estate Investments can appreciate value and generate income growth. If Market rents increase their unique trading characteristics and their potential for good income price return and inflation protection may make them a viable investment for some investors looking for further diversification and income.
The Returns on global developed real estate Investments have exceeded those of global stocks and Global bonds and recent years and have delivered competitive returns over longer periods. In addition to providing investors with attractive returns investments in global real estate May enhance portfolio diversification on account given that it holds a different risk return profile than stocks and bonds depending on the period certain real estate categories have exhibited modest correlations to traditional Investments.
