The two most common real estate investment structures are Limited Partnerships (LP) and Real Estate Investment Trusts (REITs). In both structures, the fund or company manages the properties in the portfolio and provides investors with a return based on the portfolio’s income.
In a Limited Partnership, investors are usually restricted from transferring their interests, which can make exiting the partnership difficult. REITs, on the other hand, are both publicly and privately traded and designed for investors to buy and sell their interests. In either case, the properties being managed are assets that secure the investors’ capital.
Real estate securities are significantly different from investing in most startups or service companies, where investors’ funds are typically used to cover the operating expenses of the business without a tangible asset to secure the investors’ capital.
Many of these services overlap one another and it is therefore important to partner with a team that has experience and knowledge across the board.