Should You Join a Property Development Investment Group? The Advantages and Disadvantages you need t
by
Trapp
For someone who is trying to break into the world of property development or someone who has been involved in property development for years, there is always the option of becoming involved with a group which invests in real estate rather than in stocks, bonds and other types of assets.
Different groups will use the money their members give them in a different way when it comes to purchasing properties. Each group carries with it a unique set of benefits and risks. If you are not sure whether or not these groups are right for you, here are some things that may help you decide.
What is a property investment group?
A property investment group is a fairly simple concept. A number of individuals will each invest a certain amount of money. That money forms a pool of funds that are used to finance the purchase, development and maintenance of various properties. Some groups will purchase undeveloped land. These tracts of land will then either be built on by the group or resold if that would result in a net profit. The money may also be used to purchase developed properties and the money would also be used to maintain those properties so that they could continue generating income for the group.
In many ways, a property investment group tends to behave much like a mutual fund would. Some may offer a larger return on investments but these tend to also carry a much higher risk as well. It is up to the individual investor to determine which type of group will suit them best.
Advantages of a property investment group
There are several advantages of a property investment group. The first tends to come with a well-established group that you would be joining rather than one which has only recently been formed. The advantage is that these groups will often own multiple properties instead of only one or two.
Because revenue is coming from multiple sources, property investment groups may not be as susceptible to fluctuations in the real estate market. You are often able to continue collecting a return on your investment even if an apartment complex or commercial building lacks a full complement of tenants.
Another advantage is that you do not need as much money when joining an investment group when compared with the amount you would need if you were investing on your own. Some individuals would like to invest but may not be able to come up with the higher down payment that an investment property requires. Pooling your money with that of other investors is a ready solution to this problem.
Disadvantages of Property Investment groups
The simple fact that you are part of a group and therefore cannot have free reign to choose where your money is invested is definitely the main disadvantage to working with a property investment group. You can combat this to a certain extent by researching a group thoroughly by joining it. You want to make sure that the majority of their investments are ones that you agree with. You also want to make sure that you are dealing with a group that is in a good financial situation.
The second disadvantage is that while your risks are reduced, your profits are as well. This is because the same amount of revenue from a property will be shared amongst the members rather than given only to one or two people. You are the only one who can tell whether that fact is enough to keep you investing on your own rather than with a group.
Justin Trapp is a Licenced Property Broker who writes about topics concerning Property Investment and development in the USA, To find out more about him visit his website
us-properties-direct.com
Article Source:
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