Invest In Real Estate Without Buying Houses
Asset allocation and portfolio diversity are important considerations for all investors. It is more common than ever for Real Estate and Alternative Investments to be important components to a financial plan.
Direct investment in real estate can be a complex and complicated endeavor. An Alternative Investment into a fund specializing in real estate can be a good way to alleviate some of those risks and challenges. Some of the attributes of investing in a real estate focused fund over a direct investment in real estate are diversity, simplicity, liquidity, and consistency.
Investing in real estate can be capital intensive. You can easily end up with a disproportionate amount of your net worth in a single asset. If that single asset performs poorly, then your entire real estate portfolio performs poorly. In a real estate based fund, you are typically diversified across several assets; and many times across different asset classes, demographics, and geographies as well.[spacer height=”10″] [pullQuote position=”center”]Clear Choice Fund is currently focused on the Phoenix metro market but is diversified across hundreds of properties, many different price points, many different borrowers, and spread throughout the metro area.[/pullQuote][spacer height=”10″]
It is not uncommon when investing in real estate to review a detailed proforma only to discover that it was grossly overstated, or missing key components like vacancy, maintenance, etc. It is not uncommon to hear the story about collecting $9,000 gross rent the first year; tenant moves out and does $10,000 worth of damage. The complexities of management, upkeep, taxes, insurance, and just being a landlord are often underestimated.[spacer height=”10″][pullQuote position=”center”]In a fund like Clear Choice Fund, you do not have to do any of the hands on work of real estate management.[/pullQuote][spacer height=”10″]
In a real estate investment fund, you will typically enroll for a predetermined period of time. For example, you might invest in a fund offering a fixed rate of return, say 9%, over a given period, say 2 years. Clear Choice fund for example has historically been able to offer double digit returns on a one year Note. Liquidity in a hard, real estate asset can be extremely unpredictable and can have some serious expense associated with selling.
Real estate returns can fluctuate greatly. As we have all seen, values in general can roller coaster significantly. On an annualized basis, expenses, repairs, and taxes can be erratic and unpredictable; an air conditioning unit can go out and there goes a year’s net income. A fund may offer a preferred rate with some participation upside or in the case of a fund like Clear Choice Fund you might expect a fixed rate of return over a given period.
We believe investing a portion of your portfolio in real estate is a responsible thing to consider. This has been an important consideration in the past, it is probably more so today, and we believe investment in real estate or an equivalent fund will be even more important in the future. An investment fund like Clear Choice Fund gives investors the ability to invest in the real estate market with diversity, simplicity, liquidity, and consistency.