Private Placement Real Estate Investing: The Benefits

By Jennifer Bajema | RE Investing

Nov 02
In our last post, we went over the definition of a private placement offer. If you didn’t get a chance to read it, go to our blog post here. In this post we will be discussing the benefits of investing in a private offering. Check them out below:

 

Keep in mind that we are not providing legal or tax advice. Contact a trusted professional for advice on the legal and tax aspects of Private Placement Investments.

 

Private Placement Investing is Relationship Investing

This can be looked at in a couple different ways. First, when you invest in a private placement, you are investing with the team. This team is key to whether the investment is going to be successful or not. The same opportunity can turn into a disaster in the hands of the wrong team. Secondly, private placements are just that, private. The whole world does not have access to the deal presented. The deal is available to potential investors because of their relationships and connections.

 

More Opportunity for Tremendous Yields
Private Placement Real Estate investments often offer returns that are much higher than you would see in the paper markets. On top of that, with real estate offerings, you are investing in a tangible asset.

 

Ability to do More With Less
Private Placements allow smaller investors to be able to get into bigger deals. An investor may have $50,000 or $100,000 to put in a deal, but a $4MM deal is out of their league. The sponsor does the work in a private placement to raise the money to allow multiple smaller investors to receive the returns that a larger deal can provide. Additionally, the investor is also able to get into different niches, product types and markets without having to become an expert. The sponsor and team is relied upon to become the expert and find the opportunities.

 

Limitless
As long as a private placement adheres to state and federal laws, the sponsor and investors can be creative in the way the deal is put together. A private placement can be constructed in a multitude of ways to make the deal the most valuable to all parties involved.

 

Use Retirement Funds
Retirement funds, through the use of a self directed IRA can be used to invest in a private placement. There are certain rules that must be followed in regards to using retirement funds in this type of investing. Talk with a professional to find out more about this.

 

More Efficient than Wall Street
Private placement cuts out the large investment firms and allows you to invest directly in a deal. You can avoid speculation, froth money and REIT investing.

 

Now you know what a Private Placement offering is, and the benefits of investing in one. But not all offerings are equal. Next post we will discuss what to look out for when investing in a private offering to protect your money and lower your risk when investing.
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About the Author

Jennifer Bajema is the Co-founder of Access Property Management Group. She has worked in every part of the company, but now focuses on client education and business growth. Her experience in running a property management business is now over 10 years!

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