Investing in Passive Real Estate
November 12, 2018
Investing in passive real estate is something anyone can do, whether they have no expertise or are well versed in finances and real estate. In invest in passive real estate, an investor simply provides the capital and allows a professional to do the investing on their behalf. It is a lot like stocks and bonds in that the investor is the one who bears the responsibility for their investment.
A private equity fund is one type of passive real estate investment. In this scenario, money is pooled together from many investors into a single fund then an investment is made. In a private equity fund, there is typically a management group or a designated manager, and there is a limited liability partnership amongst the investors. The manager or management group will actively manage the investments in the fund, but the investors can be involved on a regular basis or not. As an investor in this type of investment, it is imperative to have the real estate and financial knowledge needed to understand all the risks associated with the investment, as well as the potential returns. Typically, the minimum investment in a private equity fund is substantial.
When it comes to private equity funds, institutional and accredited investors that have a high net worth are the ones able to participate. The minimum investment is typically more than $100,000 but can vary. Generally, there is a two percent management fee annually and a twenty percent fee on the earned profits for private equity funds. If you are interested in being an investor in private equity funds, you need to be able to have a large amount of money tied up for an extended period of time.
Obviously, private equity fund investment isn’t for everyone, but if you can spend the time and money, it could bring in some nice returns for you.