When you are planning your real estate investments, one of your first tasks is to decide what kind of exposure to the real estate market is appropriate for your situation. Different exposures produce varying levels of risk and return. Your choice will also influence the means by which you will acquire the real estate.
The first type of market you could participate in is the private market. In the private market, you would be purchasing a direct interest in one or more real estate properties. You would own and operate the piece of real estate yourself (or through a property manager), and you would receive the rent payments and value changes from that investment. For example, if you were to purchase an industrial building that was leased to one or more tenants who pay you rent, you would be participating in the private real estate market. You could also participate in this market by purchasing properties with any number of partners - this is known as a pool or syndicate.
Alternatively, you could choose to invest in the public real estate market. You would be participating in the public market if you purchased a share or unit in a publicly traded real estate company, such as a real estate investment trust (REIT). If you buy a real estate security, you are investing in a company that owns real estate and manages it on behalf of the shareholders/unit-holders of the company. As a result, your exposure to the real estate market is more indirect. A real estate security usually pays a dividend or distribution in order to send the rent payments that it receives from tenants to its shareholders/unit-holders. Any price appreciation or depreciation in the assets owned by the company is reflected in its share or unit price.
Avraham
martinezglobal@gmail.com
Interesting article! thanks for that useful info..i'm so interested about real estate investment.
Posted by: property in the usa for sale | February 01, 2012 at 08:31 AM