In addition to choosing their assets individually, investors have another option to build a portfolio: buy shares of investment funds. These funds are managed by professional managers and can have different compositions. In the case of real estate investment funds (or FIIs), the focus is on the real estate market. Thus, whoever becomes a shareholder starts to invest in the purchase, sale, or rental of real estate through them. But do you know the advantages of investing in an FII? Check out 10 reasons to invest in real estate funds and find out if this investment alternative is right for you!
Possibility of passive income
This is one of the biggest advantages of real estate funds. They are known for paying good dividends – and most pay monthly. There are some funds that do not make this monthly payment, but they need to distribute the profits frequently. In this way, it is also possible to obtain a constant income. In this sense, they are attractive options for those who invest in retirement, for example. In addition, it is also possible to make a profit by selling the shares of the funds for a higher price than they were purchased.
Ease of access
However, many people make poor choices because they do not consider some disadvantages of buying real estate directly. One is bureaucracy. After all, buying and selling homes in Abbotsford, BC takes a lot of money and several documents. Not to mention working on price negotiations. In contrast, real estate fund quotas offer easy access.
Another undeniable disadvantage of those who invest in the direct purchase of a house in Surrey, BC is the price. So, if you are looking for reasons to invest in real estate funds, know that the lowest cost is one of the benefits that this investment offers.
Have you ever thought about being a partner in large enterprises – such as shopping malls, warehouses, and commercial buildings – without paying thousands or millions of reais? This is feasible for those who invest in FIIs. When you buy shares in a fund, you participate in the profit of these high-quality properties. And the best: without paying the amount to buy them in full, without having to pay taxes, issue purchase certificates, etc.
Protection against inflation
A very common concern for investors is to protect money against inflation. In fact, this is relevant, since the loss of purchasing power can erode part of the amount invested and greatly reduce the earnings of that amount.
Considering this, you have one more reason to invest in FIIs: real estate contracts usually include clauses that allow the correction of the rent value according to inflation. That is, real estate funds that focus on rent have this advantage. FIIs that invest in other ways – for example, to buy and sell real estate or even negotiate real estate papers – can also protect their money against loss of value.
Individuals who invest in real estate funds have another very positive point when making these contributions. The income from these investments is exempt from Income Tax (IR) and Tax on Financial Operations (IOF). This means that you do not have to pay these fees on what you receive from your passive income. IR is only charged when the investor sells his shares in the funds – in this case, the rate is 20% of the value.
But you need to pay attention to some points. For the tax exemption to happen, the real estate fund must be traded on the stock exchange and have at least 50 quota holders. In addition, you cannot buy more than 10% of the fund’s shares.
Fractional buying opportunity
This is one more reason to invest in real estate funds – and it further reduces the costs of this investment. Therefore, it also increases the accessibility of these assets to small investors. The fractional purchase is the possibility to negotiate the shares by units, without having to buy a larger financial amount of shares. It is similar to what happens with stocks on the stock exchange, allowing you to invest with less money.
You certainly already know that every investment involves risks, especially variable income – the group in which the FIIs are. However, it can be said that real estate funds are slightly more conservative investments in variable income. This feature offers the possibility that your portfolio will be more stabilized in the face of possible crises.
Liquidity is an aspect that helps in this. Anyone who has a physical property knows that it is not simple or quick to sell it in a time of crisis and receive money for it. With funds this is different.
How about being the owner of a shopping mall without having to manage the building, deal with tenants or even publicize the rooms available for rent? This convenience is one of the best reasons to invest in real estate funds. The management of the ventures that make up a fund’s portfolio rests with the professional manager or the administrative staff of the fund. Thus, your part is to invest the money and follow the decisions made by management.
A diversified investment portfolio helps to improve yields and greatly reduces the risks that investors run. At this point, real estate funds are champions. Each fund can have a portfolio with several properties in different locations. So, when you buy shares in an FII, you already receive a diversified investment. In addition, as it is an asset accessible to small investors, it is possible to acquire quotes from different funds. Thus, the diversification of your portfolio increases even more.
Real estate funds need to value the transparency of information. This is because FII managers must present their financial statements every month to the stock exchange and the Securities and Exchange Commission (CVM). Transparency is also a positive mark in the relationship between fund managers and investors: reports are issued monthly on the main events in the FII portfolio.
Now you know the 10 reasons to invest in real estate funds. FIIs are certainly interesting options to consider in your investment portfolio. Just remember to be careful when choosing assets – opting for the highest quality ones that are in line with your investment objectives and profile.