If you are a property investor and find that your ability to move fast on any given property is inhibited by lack of funds, you may want to consider pooling resources with other investors and creating property investment funds.
The major purpose of pooling resources is to increase your buying power and have more leverage than you would if you remained a sole investor. Property investment funds have quite the advantage over individual investors for everyone concerned, mainly the investors and the fund manager.
So how do you get in on an investment fund? all you have to do is find one that is looking for investors and complete a written agreement to become a member of the LLC, or limited liability company and make a contribution to the fund, usually in the amount of $25,000. Once this is done all you have to do is sit back and watch the money roll in. You could opt to put the money back into the fund to increase your buying power even further.
Investing in a pool also decreases the risk taken by each individual. As an individual investor, you risk 100% of your own capital when taking on an investment. As a member of a pool you share the risk with all the other investors in the pool. Decrease your risk and increase profit margins by investing in a pool. With many excellent investment opportunities out there you can realistically expect a 15% return or more on your investments.
Usually you cannot guarantee any certain return amount on an investment but with average payouts of 9-13%, you can be confident that a real estate fund can provide you with a fixed rate of return on your investments. Investing in an investment fund is as close to a sure thing in this life as you will find.
The manager of the fund makes his or her money by keeping any amount over and above the targeted return amount and so is very motivated to find investment opportunities that exceed the expected targeted return. For example, if the targeted return on an investment is 13% and actually returns 19% the investors get paid their 13% and the fund manager keeps the 6% left over. It really is a win-win situation. When everybody wins the deals just keep getting better and better.
If the fund manager is worth their salt they will look to put together a widely diverse investment portfolio for their investors to make sure the ratio of low to moderate risk investments are on equal footing.
You can also bank on higher returns with a lot less hassle. Meaning that after your initial investment your job is basically done. The manager of the fund does all the dirt work, so to speak and you can just sit back and collect the profits. Property is a tangible asset that can protect you and the other investors from potential loss.
Investing in property investment funds gives you the opportunity for getting all the benefits of real estate investing and minimizing the effort you have to put forth to make a decent living. It really is a no brainer.