Joanna James
Planning on investing in an apartment building? Doing so is only the start. There are quite a lot of different things to consider before you do. Here are five ways to invest in apartment buildings.
The most obvious method is to simply buy the building yourself. This requires mostly upfront capital, while this might be very intimidating, this will include saving funds, knowing your budget, teaming up with a reputable broker, reviewing deals, making an offer, and hopefully getting it accepted. The benefits of buying the building yourself include planning the strategy behind your investment and making all the decisions in regard to it.
If you do not have the funds available to purchase it yourself, the next best thing is to partner with another person and pool your capital. This can be a great learning experience for both you and your chosen partner. The downside unfortunately is that you will not get to make the decisions on your own, as both of you might have differing visions for the property. However, if you and your partner are like-minded, the experience can be very rewarding and not to mention lucrative.
Syndication involves the pooling of funds in order to purchase a property. When buying an apartment building yourself, the list of things you have to consider and work on yourself is long and tedious. By opting for property developers in Sri Lanka including the likes of John Keells Properties, generally runs the investment and will do all these things for you.
Opting to invest in a real-estate fund, means raising capital with the sole intention of buying multiple apartment buildings. Here, investors generally bank on the reputation of the fund managers, their track record, and business plan as opposed to the property itself. Fund managers will utilise investor funds and decide where to invest, as well as make all the main decisions regarding the apartment building. With a real estate fund, you will also get more diversification because you will get the chance to invest in multiple properties. Downsides include, that minimum bids tend to be rather high, and you won't actually know the exact property or properties you are investing in.
A REIT is a large organisation that runs and manages multifamily properties. By investing in a REIT, you will be purchasing shares in the corporation and not in the properties themselves. There are two types of public and private REITs. Public REITs are usually bought and sold like stocks. One of the more powerful benefits of this type of REIT includes the ease with which you can buy and sell, in other terms the liquidity it affords you. On the other hand, private REITs, are formed by certain companies. Here you will be buying shares, that are not listed on public markets, where you can still buy and sell directly from organisations.
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