Real Estate Funds and Exchange Market
Real estate funds are a form of investment that allows the investor to buy shares of real estate, without having to acquire the physical property. These funds are managed by professional managers and regulated by the Securities Commission (CVM). They allow investors access to high quality properties that would normally be out of their financial reach.
How do Real Estate Funds work?
The Real Estate Funds function as a condominium of investors, where each one has a quota that represents a fraction of the total assets of the fund. The fund's assets are invested in commercial, residential and industrial real estate, among others, and the income obtained from renting and selling real estate is distributed to shareholders in proportion to the number of shares they hold.
Advantages of Real Estate Funds
Real Estate Funds have several advantages. They allow investors to access high quality real estate with a low initial investment. In addition, the funds are professionally managed, which means that investors do not have to worry about property management. Another advantage is liquidity, as fund shares are traded on the stock exchange, which allows investors to buy and sell their shares easily.
Disadvantages of Real Estate Funds
Despite the advantages, Real Estate Funds also have disadvantages. One of them is the risk of vacancy, which occurs when a property is not rented and, therefore, is not generating income. Another disadvantage is the risk of property devaluation. In addition, funds have costs, such as management and brokerage fees, which can reduce the return on investment.
Real Estate Funds and the Exchange Market
The foreign exchange market can affect Real Estate Funds in several ways. For example, if the local currency depreciates against other currencies, real estate located in the country may become more expensive for foreign investors, which may reduce the demand for these properties and, consequently, the value of shares of the funds. In addition, if the interest rate increases, the costs of financing real estate can increase, which can reduce the return on funds.
Conclusion
Real Estate Funds are a form of investment that allows investors to have access to high quality properties with a low initial investment. They have several advantages, such as professional management and liquidity, but they also have disadvantages, such as the risk of vacancy and property devaluation. The foreign exchange market can affect funds in several ways, such as through local currency devaluation and interest rate increase.
