Are Real Estate Investment Funds A Smart Option For You?
Real estate investment funds have been around for a few years now, yet they are becoming a great alternative for investors. Hence, to answer this question, we would like to go over a full review about investment funds, what they are, how they work, and how you may benefit from them.
What Is an Investment Fund?
An investment fund is a source of capital that belongs to multiple investors. It gets used to buy securities together while each investor holds proprietorship and control of their own shares. An investment fund delivers a bigger range of investment prospects, expert supervision, and fewer investment fees, or none in some cases. Different types of investment funds include, but are not limited to:
- mutual funds,
- exchange-traded funds,
- money market funds, and
- hedge funds.
Having such a vehicle that allows you to bring together related and unrelated investors, allows you to raise capital in a way that some investors could not do alone. There are many ways in which an investment fund is set up and functional for its investors. However, the common goal is set from the beginning and remains throughout the term of your investment.
Can Investors Control the Investment Fund?
Although you have control over your shares, you cannot make decisions about how the fund’s assets are distributed for investment. Investors choose a fund based on its objectives, risks, fees and other aspects. With a fund, a fund manager oversees everything related to the fund and selects which securities it should hold, in what capacities and when they should buy or sell said securities.
An investment fund can be broad-based, such as an index fund that tracks the Standard & Poor’s (S&P) 500 index, or it can be strictly focused, such as an ETF (exchange-traded fund) that invests only in small technology stocks.
Fund managers use their knowledge, experience, and research to help your money grow and grant you investment income in some cases. These managers go deeper to find the most reliable investment options for you.
How Do You Price a Fund?
The funds’ shares are usually priced each business day. A typical dealing point is at midday. However, this can be different with each fund management company and type of asset.
How Many People Can Join an Investment Fund?
The number of investors in an investment fund is not fixed. Shares can be added to a fund, or sold in agreement by the parties. Some funds are originally designed to have a specific number of investors, and some are open-ended depending on the investment goal.
Open-End Vs. Closed-End
Most investment fund assets are part of open-end funds. These funds produce new shares as investors bring money to the pool, and withdraw shares as investors cash out. There are no restrictions on the number of shares that can be issued. These funds are typically priced just once at the end of the trading day. For example, most mutual funds are open-end funds.
As an investor, you won’t need a lot of money to enter into an open-end fund, making this type of investment an easy way to start investing. You will also have little to no fees in some cases.
Closed-end funds exchange in a way more like stocks do than open-end funds. Closed-end funds are controlled investment funds that produce a fixed number of shares, and trade on an exchange. While a net asset value (NAV) of the fund is calculated, the fund trades based on investor supply and demand. Therefore, a closed-end fund may trade at a premium or a discount to its NAV.
Unlike the open-end funds, closed-end funds have a limited number of shares that can be sold in an open market.
Closed-end funds are not required to have cash reserves to meet redemptions. Therefore, these funds are able to invest in illiquid stocks, securities or markets such as real estate. While these funds may provide lower securities for investors, they often grant higher returns to its investors.
Investment Funds & Real Estate
Since closed-end funds provide a platform for real estate investments, companies such as DiversyFund developed a real estate investment fund to fit investors needs.
This fund is a real estate debt fund targeting risk-adjusted passive income returns for its investors. We are able to do this by making secured loan investments for a diverse array of ground-up commercial, multi-family, mixed used and residential development projects.
In our case, all of the fund’s loans are completed with its developer affiliate, DiversyFund. Thereafter, we are able to provide consistent quality control and transparency and better aligning economic goals between the fund and the developer.
It used to be that putting your investment money into an insured savings account could earn you great amounts of interest, but that’s not that case anymore. The newer way to invest and expect high returns are real-estate investment trusts (also known as REITs). That’s why our real estate investment fund is able to have such a success record.
Why Choose DiversyFund’s Fund?
The following are a few reasons why you should pick our fund over other funds:
- The experts who control our fund have over 20 years of experience in stock trading, real estate law and real estate development. Moreover, they have first-hand knowledge of the location of investment.
- Many companies offering funds, offer funds in areas that are not familiar to them. Some even obey to international laws, such as European Laws.
- Our fund averages an 11.4% (net) returns since its inception in 2013.
- Minimum investment of $10K and only locking up your investment for 2 years.
- After searching for detailed information on other funds, we were not able to find clear information on track record, investment terms, and clear targeted returns with other companies.
Being that DiversyFund focuses its market research in California, we are creating a steady flow of real estate opportunities including many off-market and below-market transactions. Being on-site at all times allows keeping better quality control on all our investment opportunities.
Offering our investors, the best opportunities is what we always aim to do. We are there from start-to-finish. If you ever come to our office, we might not be there. You’ll find us at one of our construction sites or studying the ground for a new investment development. That is what we do, and we are proud to share it with you.
What about Fees?
Our fund has NO FEES! Being one of the first funds to offer no fees seemed like the right thing to offer our investors. We believe in our investors and we believe in our investment properties. That’s why we guarantee no fee payment, only earnings at the end of your 2-year lock up period.
To learn more about our fund and other investment opportunities, click here to register and stay in the know of current and new investment opportunities.