Author: Jose Batres

Investments are one of the easiest ways to acquire wealth over time, but the field is complex and full of diverse opportunities. Real estate funds are a type of mutual fund investment that is linked to income-generating commercial real estate properties. Funds that are sourced from multiple investors should be managed by a professional to maximize the success of the investment.

Real estate funds can take many forms, and the requirements for investing will vary. The list of benefits includes tax advantages, high profitability, and opportunities for diversification.

Below, Jose Ernesto Batres Gonzalez explores the basics of real estate funds: what they are, how they work, and what their benefits are.

Real Estate Funds Explained

A real estate fund is an investment opportunity that allows an individual to invest in large-scale commercial real estate properties. Most real estate funds function just like mutual funds, meaning they are composed of an accumulation of funds from multiple investors, and the entire sum will be managed by a professional or sponsor.

How it Works

Real estate funds can take many forms and will differ in their investor requirements quite significantly, depending on their characteristics. There are three types of real estate funds.

Exchange-traded funds are those that have a direct comparison to the function of the stock market. Real estate mutual funds are the most common and the most inclusive for new investors. Private real estate funds invest directly in commercial real estate and are only available to well-established investors.

Requirements for investing in a real estate fund can take the form of net-worth minimums, minimums and maximums for investment amounts, a minimum investment period, and more. Individuals can send liquid assets directly to their sponsor to begin investing, or they can invest using a self-directed IRA fund.

Benefits of Real Estate Funds

Whether an individual has experience investing in real estate or they are brand new to this sector, real estate funds will be associated with a number of benefits:  

• Tax Advantages

Real estate funds are long-term investments, and they will be taxed accordingly. This means an investor will be able to generate income for many years and not worry about taxes until their shares are sold. Interest rates for long-term capital gains will be lower than short-term investments, allowing investors to keep more of their income.

• Profitability

Like any other type of real estate investment, real estate funds are linked to higher profitability and more dependable returns than most other types of investments. Since these funds aren’t linked to the risky ups and downs of the stock market, they are a safer option for high investment amounts.

• Investment Diversity

Aside from minimum investment amounts and an individual’s available cash, there is no limit on the number or diversity of real estate funds that can be invested in at one time. This means every investor has the opportunity to spread their investment money around to different areas of the world, different types of properties, and more to diversify their portfolio and improve their chances of success.

Final Thoughts

Overall, real estate funds are a reliable, profitable, and conveniently hands-off investment opportunity in the real estate industry. Anyone who appreciates these qualities in an investment would do well to diversify by utilizing real estate funds.

A good property manager maintains the grounds, answers maintenance requests, and promptly collects the rent.

A great property manager does all this while also maximizing profit. 

For many rental estate investors, especially beginners, a property manager is an essential partner when it comes to boosting financial returns from all properties, big or small.

While real estate is traditionally one of the more reliable and lucrative investments one can make, Jose Ernesto Batres Gonzalez says that the property managers are the ones who largely increase the chances of the best possible return on the investment.

Hiring the right property management company isn’t just a safeguard on one investment. Protecting real estate assets often makes purchasing additional real estate investments a reality, going a long way to establish financial security for the future. 

It Starts Early

Working toward a fantastic return on investment (ROI) begins before a property even hits the market. The interior and exterior should be in top shape. Everything should work as expected. All repairs should be completed.

It usually takes less time to secure a lease if a property is “rent ready,” which also results in faster financial returns.

Don’t Neglect Inspections

Inspections on rental properties tend to occur only when someone moves in or moves out. This is a mistake, though.

Investors and property managers should contruct a regular inspection schedule in order to pinpoint any general maintenance and repair needs. Such inspections help uncover potentially pricey repairs before they can get worse.

Communication is Key

Property management companies thrive because many real estate investors cannot be actively involved with their properties at all times. Property managers can spend far more time in-person at properties, taking care of any issues that may arise.

This makes good communication between a property manager and a client investor necessary. Any tenant concerns and improvement needs must be discussed immediately with an investor. In turn, investors should be able to communicate decisions rapidly with a property management company.

The overall value of a property increases tremendously with consistent communication. 

Consider Upgrades

Depending on an area’s real estate market, ROI may be boosted by either adding popular amenities or investing in general upgrades. If a property goes unrented for too long, it may be outdated. Cost-effective upgrades include everything from bathroom and kitchen renovations to new flooring.

Property managers may also suggest attractive amenities that will set a rental apart from others in the same market, including adding a gym, installing a laundry facility, or opening a dog park on-site. 

Stay on Top of Rental Rates

Property management companies can help investors set the all-important rental cost. If the rent is too low, a substantial ROI will be out of reach. If it’s too high, it’s harder to fill vacancies.

If the market supports it, investors and property managers may also agree on rental increases each year. Even a 1% to 3% annual rent increase helps the bottom line.

Get the Right Tenants

It’s often the property manager — or a team hired by the manager — who finds and signs responsible tenants.

Potential tenants should be comprehensively screened and evaluated based on their financial history, credit score, and referrals from previous landlords through an overall background check.

I, José E. Batres González, categorically reject the cowardly and malicious accusations given to the media on Tuesday, September 13, 2022 by people who face several judicial processes for acts committed outside the law, related to corruption and money laundering.

I declare that I will continue to collaborate with the corresponding authorities, providing all the necessary information, despite the defamation, extortion, blackmail or threats that this implies.

Firmly and forcefully, I disqualify any insinuation of my participation in facts that are at odds with morality or the law.

We will take the corresponding legal action so that this new criminal act is investigated, tried and punished as appropriate.

Citizens have rights that cannot be left at the mercy of people who act without scruples, in total contempt and outside the law.