Investing in Real Estate: Benefits and Opportunities for Investors

Real estate is seen by many investors as a way to build wealth and generate income. In this article, we discuss the benefits of investing in real estate and the ways you can participate – even without buying a property yourself.

Why Real Estate?

Real estate can be a source of relatively predictable income: rent or interest from loans secured by real estate. Additionally, real estate often has a different risk-return profile than pure stocks or bonds, making it a valuable addition to a portfolio. Historically, real estate has been a stable asset in many regions, although there are certainly market and project risks involved.

Direct vs. Indirect Real Estate

You can invest directly in real estate by purchasing a property and renting it out, but this requires significant capital, knowledge, and management. Indirect investment can be made through real estate bonds: you lend money to a project that is secured by real estate as collateral. You typically receive an agreed-upon interest rate and your principal back at the end of the term. This way, you benefit from real estate without being an owner or manager yourself.

Return and Risk

The return on real estate (bonds) depends on the project, location, and structure. It is important to always understand the risks: projects can experience delays, and in the worst case, there can be losses. Therefore, only choose projects where you understand the documentation and where the securities (such as collateral and possibly a Security Agent) are clear. Invest only with money that you can afford to lose for the duration of the term.

Accessibility

In the past, real estate was primarily reserved for large investors. Nowadays, there are platforms where you can invest in real estate bonds starting from a limited amount. This makes real estate as an investment more accessible to a broader group of investors, provided you make informed choices and accept the risks.