The basic idea behind investments in real estate is familiar to many. One of the most common ways of becoming a real estate investor is to buy a house or apartment and rent it out. This is known as a cash flow property, which generates its owner monthly profit in the form of rental income. An equally common way is to buy a property in disrepair and then repair and renovate it to add value to the investment. In a similar way, a person might buy an empty plot, build a piece of property on it and sell the whole package for more than they have spent creating it. This is the idea behind investments in real estate in a nutshell.
Real estate is a popular form of investment because it combines a monthly cash flow and the potential increase in value. This guarantees both good and secure profit. No wonder then that so many private persons, foundations and companies have decided to become real estate investors.
WHY CHOOSE A REAL ESTATE FUND?
Investing in a real estate fund will save you a lot of trouble. For comparison, let’s consider the differences between investing in a single property and in a real estate fund. If you decide to invest in a single piece of real estate, the investment process always starts with buying a property. If you rent it out, it will generate income from rents. The amount of return the owner is left with is influenced by the real estate’s purchase price, possible financing costs, changes in the price of the property, the amount of rent received, maintenance charges and possible repair and maintenance costs. An investment in real estate needs to be monitored and maintained regularly. For example, rent monitoring, the maintenance charge ledger, future renovations and keeping track of the decisions made by the housing company’s board are among a property owner’s duties. Mastering and controlling all these sectors requires experience and time.
Many people are attracted to the excellent profit generated by investments in real estate, but they often lose interest when thinking about the long list of an investor’s duties. If this is you, real estate investment funds may be for you. As an owner of a single property you take care of everything yourself, but with real estate investment funds somebody else takes care of all the tedious duties for you. This means no housing company meetings or looking for tenants!
Another difference between investing in a single property and investing in funds is that when you own a single property your money is dependent on one piece of real estate, whereas with a fund your investment is spread out over several. This keeps the risks modest and in control.
Previously, investments in real estate were only available to institutions and other large operators. But ICON has made investments in real estate possible also for ordinary folks. For example, the minimum investment of the new ICON Real Estate Development Special Investment Fund will be EUR 20,000. Funds give you a way to access the most lucrative investment strategy of real estate investments, i.e. the development of properties and the consequent tangible benefits, with a small amount of capital.