Private equity groups have existed for many years and the basis of these groups is that they pool together money from a number of sources and then use that money to make more, giving those investors regular dividends on their cash. In terms of this existing in real estate it is a relatively new development which only really got started in the early 90s when the property price plummeted. What many families and businesses did when this happened was to pool their money together and buy up as many properties as possible. As industry insider Tyler Tysdal shared with us, we may not be in a slump at the moment with regards to property prices but these groups still exist and here is why they are such a smart idea for investment.
Knowledge
If you aren’t too savvy when it comes to the world of real estate but you still want to invest, these private equity groups can be a great way for you to invest in real estate, without having to become an expert. The reason being is that your sole responsibility here is to invest cash, it isn’t up to you which properties are bought, which type of properties are bought, how they are managed or when they are sold. For many this can be either a great way to get into real estate or a great way to learn more about it.
Dividends
The one downside with this kind of investment is that you will usually have to wait sometime before you start seeing a return on your money, which works well for anyone with a long term plan. Once the initial waiting period is over however you can start toy see some real return on that initial capital which you invested and many comment on reaching dividend payments annually of between 6& and 8%. If you are in a hurry to see a return on your investment this may not be for you, if you can wait however you will see a very solid return on what you originally put up.
Resistance
In the history of real estate the market has never failed to recover from a slump. Those families and businesses in the early 90s knew this and that is why they were happy to part with such large amounts of money in order to buy properties. In fact for a group like this, a slump Manna from heaven because they can get the properties at low prices and they know that not only will the market pick up, but they are in a safe financial position to wait it out without having to take knee-jerk decisions. Because of the fact that the money is pooled together, exposure is very minimal here and that is why they can continue to invest, when everyone else is trying to sell.
If you want to make money in real estate this could be a great option for you.
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