Investing in real property is a very hands-on way of investing in real estate, usually at a higher cost and demanding more time to manage.
Because of the time, cost and risks that come with owning a property as an investment, you may instead choose to invest in real estate through funds, trusts and other investment products that provide exposure to the real estate market without being required to manage and maintain properties on your own.
Purchasing these products, such as a share of a publicly-traded real estate company, means you are investing in the real estate market without maintaining any properties yourself.
Understanding real estate investments
Real estate investment trust
Real estate investment trust, or “REIT,” is a company that owns real estate. REITs typically own large-scale properties like office buildings, shopping malls, hotels, warehouses and apartments. Investing in a REIT means you are eligible to receive income through payouts that the trust receives from the properties that it owns.
Real estate limited partnership, or “LP,” is commonly used to develop a property or manage properties that have already been built. The general partner, who manages the real estate LP may use money from investors to buy land and develop it or to resell it at a higher price, giving investors the potential for growth if the land or development project goes up in value.
Mortgage investment entitY
Mortgage investment entity, or “MIE,” is a mortgage-financing business that pools money from investors to lend to people who may not be able to obtain a mortgage from traditional lenders like banks or credit unions.
Syndicated mortgage is a mortgage provided by two or more investors that have directly invested in a single mortgage for a property. Unlike an investment in an MIE, a syndicated mortgage investment applies to single mortgage rather than a portfolio of mortgages.