7 Benefits of Investing in a Real Estate Income Fund

There are plenty of potential options when it comes to investing in real estate. You can buy your own property and wait as it appreciates. That applies to homes, second homes and vacation homes. You can also get involved with real estate investment trusts, real estate investment funds and many others. However, there are some pretty significant advantages and benefits to investing in a real estate income fund.

Real Estate Income Funds

Before we address the benefits offered, it’s important to understand what a real estate income fund actually is. To really understand, it’s necessary to go back to the end of the Great Recession. As things began to even out, financially speaking, and the dust began to settle, fewer banks existed. In fact, the number of banks around the world has dropped drastically since 2004. In addition to fewer banks, those that still existed were struggling, paralyzed, unable to lend. Of course, real estate development had to move forward.

Private lenders stepped in to fill the void left by conventional banks and lenders, and these eventually turned into what we know today as real estate income funds. Why have these funds persisted beyond the recovery, though? Actually, that’s due to several factors. One is that banks are more tied down with regulations than ever before – they simply cannot finance many projects. Another is that with fewer banks operating, those remaining are even more averse to risk than they were prior to the recession.

The Most Important Benefits

There are quite a few important benefits for investors here. While these benefits will vary from one investing platform to another, it’s important to understand them all. They are as follows:

Security for Capital: One of the most important benefits here is the security offered by a real estate income fund for investment capital. Direct lending takes precedence over all other types of lending (senior debt). Each debt owed by a business is compounded into what’s called a “stack”. Senior debt, like direct lending, stays at the top, and must be repaid before mezzanine loans, or most other types.

Diversification: Diversification of investments has been touted for years as one of the most important safeguards for wealth. By diversifying with a real estate income fund, you’re able to not only spread your money across a wider range of options, but to put it in a growth-oriented investment that offers protection against risk.

Steady Income: For those looking for a steady, ongoing income, the choice to put money into a real estate income fund is a great one. It can provide a steady, high-yielding income on a monthly basis. You’ll also find that in a low-interest world, these options offer a much higher rate of return. For any accredited investor, that’s the hallmark of a worthy option to add to your portfolio.

No Fees to join: With the right investment platform, you’re able to invest without any fees to get in. That means all of your investment money will go toward building your wealth, rather than being broken up with part going into the investment and the other part going to line the managers’ pockets.

Access to Deals Otherwise Unavailable: To put it bluntly, conventional real estate investors have access to only a fraction of what’s actually available on the market. Yes, you could buy a home, a second home, a vacation home, a condo property or something similar, but those are limited choices. With a real estate income fund, you’re able to invest in everything from retail centers to medical clinics to hospitals to industrial properties to multi-family housing units. These have a much greater income potential, but without the help of a fund, you can’t gain access due to the high cost of entrance. By working together with other investors in a fund, you each get a share of the pie.

Building a Stronger Economy: Banks are lending averse. They fear risk and extend credit to fewer and fewer ventures these days. The result of that is a further weakening of an already shaky economy. By working with a real estate income fund, you’re able to make a direct, dramatic impact on the economy for the better. Every bit invested in these funds gives business owners and developers access to the money they need to start new projects, or bring current projects to completion. Not only does that grow the economy, but it helps provide everyday people with the services they need. Imagine how much good a new medical clinic would do in a depressed area with no access to skilled healthcare workers. And that’s only one example.

Professional Management: Managing a portfolio can be a very significant challenge. Add to that the difficulties involved with managing investments with which you aren’t inherently familiar, and you can easily become overwhelmed. However, with the right platform, investing in a real estate income fund can ensure that you have the professional, ongoing management that you need not only for peace of mind, but for true wealth building.

Significant Returns: While different platforms will offer varying rates of return, the average for the industry is between 8 and 10 percent. That compares very favorably with other types of investments, and actually outstrips many conventional options. Investing in a real estate income fund can be one of the best ways to ensure that you’re seeing the maximum return possible on your money with less risk than what you’d experience with the stock market.

There you have them – several compelling reasons to make real estate income fund investing something to consider. For more information, check out our website:


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