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12 Benefits of Investing in a Private Real Estate Trust

1) Tangible Assets

An investor in a real estate trust can feel secure in the fact that their investment is backed by real estate. Being secured by a tangible asset with potential steady rental income and appreciation creates a strong sense of security.

2) Pooled Investments

A real estate trust allows investors to overcome a lot of the barriers of entry to investing in real estate. Instead of having to save up all of the capital on their own for a down payment, numerous investors can be pooled to acquire larger properties. These larger properties can create economies of scale by rental units costing less on a per unit basis and result in more cost efficiencies by having a centralized property manager, which can potentially lead to a stronger return on investment.

3) Multiple Ways to Earn Returns

Private real estate trusts have four primary drivers that help grow the total return of the real estate portfolio:

·         Positive cash flow – positive cash flow occurs when rent exceeds your mortgage and operating expenses

·         Reducing debt – tenants will pay the mortgage for you, increasing equity in the process

·         Building equity through improvements – renovations add value to the property

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·         Asset Appreciation – real estate values have historically increased over time

4) Distributions Can Provide Revenue

A Real Estate Trust can pay out a portion of your return quarterly to provide you with a steady income.

5) Registered Fund Eligible

Real Estate Trusts are structured in a way that allow for investments through registered savings plans, including Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP). Due to this, investment returns could be applicable for tax benefits based on the eligibility of those plans. 

6) Professional Management

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Strong management can provide a diverse range of expertise in areas such as real estate investing, property management, construction, finance, development and strategy. Management teams are often co-invested in the trust; this ensures that interests are completely aligned with investors.

7) Regulated Transparency and Controls

A real estate trust is regulated by the applicable securities commission that regulates each province.  This helps to ensure accurate financial information and reporting for investors.

8) Real estate Investing with Limited Liability

A real estate trust is structured in a way that protects investors from personal liability that they may be exposed to if they personally owned their own investment property. Investors in a trust are not responsible for the liabilities of the trust.

9) Diversification

Investors in a real estate trust may benefit from a large diversified real estate portfolio that spreads the risk over several properties and provinces.  

10) Cash Reserves

Direct real estate investors may struggle with maintaining sufficient cash reserves to cover expenses such as maintenance, vacancy, and renovations. A real estate trust pools investors’ capital and allows for adequate cash reserves to cover the expenses of managing the properties.

11) Low Barrier to Entry

The low minimum investment rates opens the door for a wide variety of investors including those who do not have a large amount of capital but would like to invest in real estate early in their career. 

 

12) Automatic Reinvestment

Distribution Reinvestment Plans (DRIP) give the option to investors to have their distributions automatically reinvested in the fund. This provides a hassle-free reinvestment, often at discounted trust unit prices to help grow overall returns for investors. 

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To learn more visit our website or our campaign page on FrontFundr

Christine Jamieson