What Is a Real Estate Investment Group (REIG)?

Posted May 22, 2022

What is a real estate investment group?-940539844

If you've become interested in real estate investments because of the potential for high returns, you'll find that there are many different types of real estate investments at your disposal. One such investment is a real estate investment group, which gives you the opportunity to invest in real estate without needing to actively manage the property.

What Is a Real Estate Investment Group?

A real estate investment group is a type of business that aims to buy, sell, renovate, or finance real estate. It's common for real estate investment groups to purchase multi-unit properties like apartment buildings. Once the company in question has bought a set of condos or apartment blocks, investors are then given the opportunity to purchase these condos or apartment buildings through the company. If you make this type of investment, you will be joining the real estate investment group that provides you with this opportunity.

All real estate investment groups consist of multiple shareholders or partners that help raise the capital to make the initial investments. By obtaining several sources for the capital investments, the group will have access to a larger amount of capital, which means that broader investments are possible. A real estate investment group can structure the group in practically any way they see fit. As such, nearly every type of real estate investment is an option for a REIG.

While real estate investment groups tend to invest in condos and apartment buildings, these groups can also flip properties, provide property financing, sell property units, and lease properties. In fact, there aren't really any limits to the investments a REIG can make, which allows a REIG to attract more investors.

When to Invest in a REIG

Because of how many types of real estate investments there are, you can weigh your options when trying to determine which real estate investment is right for you and your portfolio. The main appeal of a REIG investment is the potential for gaining returns in several different ways. Most REIGs focus on developing a comprehensive portfolio of property investments, which allows them to obtain numerous types of returns.

Since a REIG can invest in rental homes, commercial units, apartment buildings, and commercial buildings, you may be able to earn income from rental payments, property management fees, and mortgage lending. It's common for high-net-worth investors to put their money into REIGs. These investments are ideal for high-net-worth individuals because of the ability to directly invest in real estate without needing to take on management responsibilities.

You may also want to invest in a REIG if you enjoy flipping houses or like managing rental properties. As an individual investor, you will have the opportunity to purchase one or more properties by going through the REIG to make your investment. The units you invest in will be managed and marketed by the REIG, which allows you to relax and enjoy the returns from your investment. In return for managing your property, the REIG will take a percentage of the income you generate each month.

Pros and Cons of a REIG

The main benefits of investing in a REIG include:

  • Capital is pooled for ventures
  • There are no restrictions when it comes to investment opportunities
  • Allows for a diversified portfolio

A few issues that occur when investing in a REIG include:

  • The REIG fees can substantially reduce your profits
  • Your investment could fail if you partner with an inexperienced group
  • You may be unable to freely access your funds

Real estate investment groups are large companies that have the capital needed to invest in sets of condos and apartment complexes. If you want to invest in a REIG, you should first take some time to research the companies at your disposal while also making sure to identify the group fees. Investing in REIGs is an effective strategy for passive investors.

This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. There is no guarantee that the investment objectives of any particular program will be achieved. All real estate investments have the potential to lose value during the life of the investment. All financed real estate investments have the potential for foreclosure. The actual amount and timing of distributions paid by programs is not guaranteed and may vary. There is no guarantee that investors will receive distributions or a return of their capital. These programs can give no assurance that it will be able to pay or maintain distributions, or that distributions will increase over time. TIC properties employ professional asset and property management, so while TIC co-owners vote on major issues, they do not have direct say
over day-to-day property management situations.Programs that depend on tenants for their revenue may suffer adverse consequences as a result of any financial difficulties, bankruptcy or insolvency of their tenants.

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