1. Direct investments include single family houses, duplexes, apartments, land, and commercial property. Indirect investments include real estate syndicates, real estate investment trusts, high risk mortgages, and participation certificates.
2. The advantage is that if you want to invest in real estate but you can't afford it you can invest in an indirect real estate investment which will have a trustee appointed to hold legal title to the property on behalf of you.
3. The disadvantages of direct and indirect real estate investments is that the housing market my go down and you will lose money. Management of the real estate is also a problem when it comes to fixing up and maintaining upkeep.Illiquidity is a disadvantage sense houses cannot be turned into cash quickly. Lastly there is a lack of diversification sense properties are expensive.
4. A similarity is that all help you to buy real estate that you may not of been able to afford. A difference is that investing in a syndicate is mostly organized as a limited partnership while a reit and pc are similar to mutual fund. Another difference is that syndicates and reit's can be more risky than pc's.
5. I could tell them that they are risk free mortgages that have been purchased by the government. I would tell them that they can purchase them from ginnie mae, freddie mac, fannie mae, or sallie mae.
6. Purchasing a home is a good investment sense home prices have risen over the years and you have a lot of control over what to do with the home.. Having mortgages provides tax benefits. Commercial properties produce rental income. Buying just land can provide great income or can be very risky. With a syndicate your investment will be diversified but you will only be liable for the amount you have invested. REIT's are similar to mutual funds and you may invest in a equity, mortgage, or hyprid REIT.PC's are risk free but you have little control.
Monday, April 27, 2009
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