Real Estate Funds, also known as FIIs, have gained increasing popularity among investors. This is due to the fact that they offer an efficient and affordable way to invest in real estate, without the need to buy a physical property. Understanding the different types of Real Estate Funds is essential for making informed investment decisions. In this article, we are going to explore the main types of FIIs available on the market.
Income Fund
The first type of Real Estate Fund that we will discuss is the Income Fund. This type of FII invests in properties that generate income, such as office buildings, shopping malls, industrial warehouses, among others. The purpose of this type of fund is to generate income through the rental of these properties. Therefore, they are an excellent choice for investors looking for regular passive income.
Development Fund
The next type of Real Estate Fund is the Development Fund. This type of FII invests in real estate projects in the development or construction stage. The aim is to sell the properties upon completion to make a profit. This type of fund is riskier than the Income Fund, as the return depends on the success of the development project. However, they also have the potential to offer higher returns.
Securities Fund
Another type of Real Estate Fund is the Title and Securities Fund. This type of FII invests in real estate securities, such as Real Estate Receivables Certificates (CRI), Real Estate Credit Letters (LCI) and Mortgage Letters (LH). These funds seek to generate income through interest and dividends on these securities. They are a good choice for investors who want exposure to the real estate market but prefer to invest in bonds over physical real estate.
Fund of Funds
The Fund of Funds, also known as FoF, is a type of Real Estate Fund that invests in other FIIs. The purpose of this type of fund is to provide diversification by investing in a variety of other real estate funds. This allows investors to have exposure to a wide range of real estate and investment strategies. FoFs are a good option for investors who want to diversify their real estate investments without having to research and invest in several different FIIs.
Real Estate Receivables Fund
The last type of Real Estate Fund we will discuss is the Real Estate Receivables Fund. This type of FII invests in real estate debts, such as mortgages and other types of loans secured by real estate. The objective of this type of fund is to generate income through interest on these loans. This type of fund can be a good option for investors who want a regular income and are willing to take the risk of default on the loan.
In conclusion, there are several types of Real Estate Funds available to investors, each with its own characteristics and risk levels. By understanding these different types of FIIs, investors can make more informed investment decisions and choose the funds that best suit their needs and investment objectives.
