ABC of Real Estate Investments

Real estate in its traditional sense falls in two categories ownership interest where the title can be transferred to another investing party with the full risk attached to the asset and leasehold interest where the rightful owner leases the property to the investing party without transferring the risks. But in investment finance sense, it is an asset class consisting of investment in property through debt and equity.



Private Vs Public Markets

The decision to invest I real estate has two fronts. Number one is deciding on the kind of exposure you are willing to accept. You can either invest in public markets or in private markets which are dominantly done through private equity funding organisations like Everstone Capital. Type of exposure determines the returns you are likely to receive and the risks you might face against your investment.

Private markets are more stable as cited by some experts but that is all subjective as no statistic has been able to substantiate that. In a private market investment can be made through direct interest in as many assets as one can purchase. The quick way to make some money is a fix and flip strategy where you buy a property at undervalued price and make changes to appreciate the value of the property before selling it off. Another way is to opt for leasehold where you put it on lease or rent and get period instalments for the term of the contract.

On the other hand, public markets are different where you will have to participate in the public market to purchase a share or a unit offered by publically traded Real estate funds and companies such as Real Estate Investment Trusts (REIT). These real estate companies are title holders of several real estate projects and manage it on behalf of the investors or shareholders. The real estate security like other publically traded security pays a dividend to its shareholders from the rent or returns it gets from the properties and projects. Any changes in the value of the asset such as appreciation or depreciation affects the value of the share as well.

Equity and Debt Investments

Besides deciding the markets, the other decision is to decide between debt and equity. Debt investment means lending money to issuer of the debt security where you receive periodic interest payments and the principal payment at end of the term. Alternatively, equity investment means that you own the titles of the property that you invest in and profit from its appreciation and lose due to depreciation. The returns match the risks involved in equity investment.

Comments

Post a Comment

Popular posts from this blog

Know About These 4 Points Before Investing In Private Equity

Image
Private equity investment is quite a tricky concept to understand. One must be highly aware of what it is all about and what all it entails before investing. Equity is all about raising funds for a company with no obligation of having to pay back the dividend to shareholders.   The concept is a pretty vast and risky business. But to increase your chances of success and good returns on private equity investment in India , there are a few points you must keep in mind. We narrowed it down simply for you. Take a look-                          Stable cash flows: A private equity investment is likely to be good as the deals get improved returns because a good portion of finance is being used for investment. Using debt is known as leveraging the company’s assets. The company must strive to also make considerable interest (monthly, quarterly, etc.) and repayments. They can’t miss those payments either. If they succeed in this, banks will be open to lending as they can se
Read more

How to prepare a perfect pitching strategy for your equity firm

To secure funding for your firm or start-up is one of the most important things for the health of your company. Many pitches made to limited partnership firms (LP) fail because of one little piece of information that you forgot to put or did not put in the right place. For some, the presentations are where you make or break your pitch and to garner and hold the attention of the people who will help you secure your funding is very important. To help you secure your private equity funding and ensure a better future for your company, here are a few tips:   Keeping the presentations short and crisp The presentations should not be long and tedious because no LP would want to sit through a pitch that would beat around the bush and not get to the main highlights as soon as possible. The first couple of minutes are the most crucial and this is the time where you should embed your most important messages. Presenting the track record at the start Anyone investing in any typ
Read more

Five Important Tips For Private Equity Investors

Image
The world of private equity is all topsy-turvey. What might be relevant for today may not make any sense few months later. It is important for investors to be on their toes most of the time so that they do not have to bear any losses. Here are five important tips that private equity investors can apply to make right business decisions.  Keep on transforming your business: In order to drive profits, one should always keep on making changes in their business from time to time. A right strategy is required to drive growth. Prices of Real estate in India are all time fluctuating and changing your business investments accordingly is imperative to keep your business stable. Hunt for the right opportunities: Private equity market in India is driven by right timing. If you are planning to invest in PE funds in India then you must do it at the right time. Try to fetch the right opportunities and also keep yourself updated with what your competitors are doing.    Have experts on your
Read more