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How To Start A Real Estate Investment Group

Are you thinking of starting your own real estate investment company? Real estate investing has been around for thousands of years. In fact, it is one of the businesses that can never go out of existence. As far as humans continue to exist, real estate business will continue to thrive. This is why it makes so much sense to invest in the real estate industry. Donald Trump – the president of the United States, and tons of other millionaires around the world are known for their investment in this industry.

Perhaps, the great thing with the real estate investment is that it is an investment you can make today and it will continue to pay you for life. You can even pass down the business to your generation. Investors make money by buying low and selling high. You can also make money by putting up the property into the rental market. According to the recent report, the US real estate market is very favorable for investors at the moment. If you are thinking of starting a new business, think of starting a real estate investment group.

What is a Real Estate Investment Group?

Simply put, it involves bringing together professionals and experts from different backgrounds such as lawyers, accountants, investment analysts, to negotiate and close contracts for the purpose of making profits in the real estate industry.

Ways To Start a Real Estate Investment Group

You can start a real estate investment group in the following steps:

Research And Consult

The first thing you need to do is make your research and then consult with professionals to ensure that starting a real estate investment group is the right move for you. Ensure you meet with a financial expert to see if there are possibilities of meeting your financial requirements.

Work With Professionals

The best way to grow fast and minimize your risk is by working with professionals in this industry. Fortunately, there are companies that specialize in helping individuals as well as businesses to set up real estate investment groups. Professionals can help you take care of bureaucracies such as setting up LLC and getting funding. You will also receive valuable advice to minimize risk and increase profit.

Gather Your Members

You need to ensure that people on your investment group are as motivated as you are. You can find motivated members from various real estate investment networks. Don’t only go for those with lots of cash, look for people that are motivated to work with you.

Make Your Business a Legal Entity

It is important that you set your bylaws as early as possible. You should also go ahead and protect your investments and assets by incorporating your investment group once you begin to grow. This will help you avoid some risks and challenges later in the future. The type of business entity common to real estate investment groups is LLC since it has a fewer regulatory and reporting requirement.

Set Your Investment Strategy

You cannot just invest blindly. You need a guideline, it is important that you set an investment strategy that will guide your activities. This will make things transparent and help avoid problems in the future.

Get Financing

You probably need lots of money to start your investment. However, the amount of money you need will depend on how fast your group wants to grow. You should talk to financial experts to check the possibilities of getting funding from banks and other places.

4 Things You Should Not Do When Investing in P2P Lending (Plus One Thing You Should Do!)

Many investors may find investment in Peer-to-Peer (P2P) lending attractive due to its potential benefits, such as higher returns and shorter tenors. The barrier to entry is also one of the lowest amongst all types of investments, from just $20.

Read about the 4 things to expect when you invest in P2P lending and also the 5 reasons to start investing in P2P lending.

First-time investors who are not yet familiar with the details of P2P lending may be hesitant to start this investment. We have compiled a list of 4 things you should look out for when investing with P2P platforms to help you avoid common mistakes made by first-time investors.

1. Investing only in loans with high returns

Investors may often be incentivised to participate in P2P investments due to the high returns they potentially provide. To receive greater returns, some investors may end up only picking loans with higher interest rates. However, interest rates are priced based on the credit risk and higher interest rates are an indication of higher risks. Interest rates should not be the only determining factor for investing in a loan. As an investor, you would be better off diversifying you investments across loans with varying interest rates.

2. Not diversifying your investments

In any type of investment, it’s crucial to diversify your portfolio so that you won’t end up putting all your eggs in one basket. When you concentrate your investments and don’t diversify them, your portfolio may go south quickly if there are non-performing loans.

Expanding on the first point, a balanced mix of high and low interest rates is a way to diversify your investments. Additionally, you can also invest across different SMEs, industries, products, loan tenors as well as investment amounts.

An easy way to diversify on Funding Societies’ platform is to set up Auto Invest. The Auto Invest bots can be customised based on your investment preferences. That said, you have the flexibility to opt out of loans in which you are not interested before the crowdfunding starts.

Secondly, you can diversify across different types of investment assets that align with your investment risk profile. This can include savings, insurances and the traditional investment vehicles such as bonds and stocks.

3. Withdrawing returns when you receive them

It may be tempting to withdraw your returns once you receive them. However, experienced P2P investors typically don’t do that to potentially benefit from the compounding effect from re-investments. You can re-invest your monthly repayments to potentially receive a higher compounded interest. Your returns (in the form of interests) also start to form part of your capital which you can utilise to re-invest in upcoming loans.

By leaving the repayments in your account, you are ensured that you have funds which can be readily invested when opportunities arise, even without pumping in fresh funds.

4. Not being familiar with P2P lending platforms & the details

While the concept of P2P lending is not difficult to understand, it is important to equip yourself with knowledge of the P2P lending platforms that you wish to invest with. Investing with a stable and responsible P2P lending platform will help you minimise unnecessary risks and inconveniences. Ensure (and expect!) that the platform is responsive, transparent in its processes and stable to carry out its operations and duties for investors.

A good platform to consider is Funding Societies, the largest P2P lending platform in Southeast Asia that holds the Capital Markets Service Licence issued by the Monetary Authority of Singapore (MAS). As of March 2019, it has crowdfunded more than $450 million in the region across more than 300,000 loans. This statistic also reflects the number of opportunities for investors.

Understanding the details of each investment will also allow you to make informed investment decisions. At Funding Societies, a loan fact sheet will be provided on every investment opportunity. It contains details of the loan, its repayment schedule, a summary of the company and guarantors, the company’s financials, and comments from Funding Societies’ very own credit team.

What’s the ONE thing you should do?

Seriously consider P2P lending as part of your investment portfolio!

P2P loans are a form of alternative investments that hold many benefits, especially for new investors that would like to start small or with experienced investors looking to diversify their portfolio. An investment with Funding Societies starts from just $20.

By watching out for these 4 listed things that you should not do when investing on P2P lending, we hope that you’ll be able to have a smooth and successful P2P investment journey!

Ready to start your P2P investment journey? Sign up with Funding Societies today, or live chat with their Customer Experience team to understand this investment better.

Disclaimers

This article is contributed by Funding Societies and is adopted from this blog article.

It should not be construed that Moneydigest is endorsing this article or any of the products and services provided by Funding Societies.

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Funding Societies to buy or subscribe for any securities and/or investment products. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

Is Blockchain a Viable Investment Option?

In truth, cryptocurrencies have dominated the news during the last 18 months, thanks primarily to Bitcoin’s historic price run last year. Altcoins such as Litecoin have also generated significant interest among investors, however, while driving high levels of engagement across social media.

Although the interest in cryptocurrency investment remains largely speculative in the mainstream, there’s no doubt that the blockchain technology behind this marketplace is evolving at a rapid pace and continuing to disrupt a huge array of alternative industries.

In fact, blockchain is now emerging as the fastest-growing digital technology since the evolution of the Internet, with its distributed and immutable qualities promising to revolutionise the social and economic landscape.

In this post, we’ll explore blockchain further while asking whether or not it’s a viable investment option.

What is Blockchain Technology?

A blockchain represents a growing list of records and data, with each individual block linked by cryptography.

The brainchild of Bitcoin innovator Satoshi Nakamoto, blockchain is a decentralised technology that has become synonymous with cryptocurrency and the financial market as a whole. In fact, blockchain is based on the principle of distributing rather than copying digital information, creating far greater security and removing the need for a central authority to manage data sets.

This highlights one of the main benefits of blockchain, namely its ability to provide immutable data records that cannot be manipulated. This, along with the anonymity provided by the blockchain, has created a technology that is tailor made the financial market and entities such as forex.

Is Blockchain a Viable Investment Option in the Digital Age?

Despite being synonymous with cryptocurrency, developers have also created an array of alternative applications for blockchain.

It’s certainly having an impact on the wider stock market, with NASDAQ having launched a ground-breaking LINQ platform based on this technology. This is a digital ledger that leverages blockchain to manage the entire process of issuing and managing private equity shares, creating a comprehensive and transparent set of records while optimising efficiencies.

NASDAQ continues to blaze a trail in this respect, however, with blockchain technology now used to underpin its own transactions and to support external marketplaces that are looking to integrate distributed ledgers into their business models.

This has involved a number of innovative and crucial collaborations, including a number of particularly interesting partnerships involving organisations such as Citigroup. Wealth management brands are also evolving to incorporate blockchain technology, in order to enhance the range of assets and the efficiency of service provided

Beyond this, blockchain is also having a huge impact on the modern supply chain, with distributed ledgers being used to introduce greater transparency into the logistics sector. Not only are these ledgers highly scalable, but they also improve the accuracy of recorded data and make it easier to monitor shipments in real-time.

The Last Word

As we can see, blockchain is an exceptionally diverse technology and one that has a growing number of potential applications available.

Not only this, but the blockchain market is also growing at a considerable pace and set to achieve a market value of $16 billion by the end of 2024.

With this in mind, it’s little wonder that RSM recently suggested that blockchain technology is “too powerful to ignore”, and this is certainly a worthwhile consideration for investors across the globe.

Ultimately, there’s no doubt that this technology offers value from both a short and a long-term perspective, while investing early may well increase your returns over time.

Must-Read: Important Investment Questions Answered

WHY IS RISK TOLERANCE A FACTOR TO INVESTMENT?

Determining your preferences is the initial step to investing. Under it is risk tolerance. Risk tolerance is basically how much you are willing to gamble in any event. It can impact how you shape your portfolio. You see, the pressing need to acquire the money can make you shift towards conservative investments.

If you are worried that you are missing out on a higher earning potential, then your investments may be too conservative. On the other hand, constantly fearing the condition of your investments can mean that you are carrying too much risks. This is why you must quantify your risk tolerance by taking quizzes.

As I entered the investment scene under a renowned international institution, I was given a risk tolerance questionnaire with 16 questions. It helped me to identify the appropriate asset classes that suited my mindset.

CAN YOU RISK IT ALL BY PICKING YOUR OWN STOCKS?

I have to admit that becoming the mastermind of your portfolio sounds attractive. However, picking your own stocks can potentially become a disaster for newbie investors. Studies have shown that choosing your own stocks is almost always a losing proposition even for the professional traders. The risk versus the rewards of owning stocks are simply not in your favor.

Image Credits: pixabay.com

Why is this so? For starters, you are more likely to incur trading fees when you trade more stocks. This will eat any money you would make. Accept that you do not own a crystal ball. You cannot perfectly select the stellar companies over the dull ones. So, seek professional help whenever possible.

WHAT IS A BOND?

Whenever I give a talk about financial indepence, I always get asked about the different asset classes. Bonds is among the common ones. A bond is a fixed income investment in which an issuer or investor loans money to an entity. Entities such as companies or governments borrow the funds for a definite period of time, involving an interest rate. These bonds are used by said entities to raise money or finance a variety of projects.

For instance, an airline might take up a bond loan from the government if wants to purchase a variety of new planes. This type of loan involves a specific period and fixed investment rate. Said rate is determined by a number of factors such as the economy’s climate.

If you are comfortable with getting less money in return, then you will benefit from investing on bonds. You may think that bonds are less risky than others. However, this statement is not entirely true. Bonds are usually less risky than stocks when you are comparing products from the same issuing company. Institutions that offer bonds include Singapore Government Securities and ABF Singapore Bond Fund.

WHY IS IT CRUCIAL TO BE DIVERSIFIED?

By definition, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. Say that you invested all your money on one company. Your money will go down the drain when it goes bankrupt. Owning 2,000 shares from various companies can cushion the bankruptcy of two or more companies. It is essentially better to invest small pieces of wealth in multiple companies rather than investing it all in one.

Image Credits: pixabay.com

Simply put, diversification means that you will not put all your eggs in one investment basket. Being diversified applies to all the industries or asset classes that you will invest in. Try to invest a mix of stocks and bonds or a mix of industrial sectors. The broader your portfolio is, the more likely you are to weather a market storm.

Sources: 1 & 2

Will High Interest Rates Affect The Local Stocks?

In my road towards financial independence, I decided to invest some of funds to grow my wealth. I encouraged my colleagues to do the same by inviting a reputable insurance agent in the workplace. The insurance agent stressed how one’s risk level play an integral part in his or her actions. For many investors, they are worried about losses and interest rates.

Interest rates in Singapore are not set by the central bank or Monetary Authority of Singapore. Instead, the rates are determined by the global market and are strongly affected by the United States.

THE FED

In an attempt to control inflation, the United States’ federal fund rate is used by the Federal Reserve (or the Fed). The Fed attempts to shrink the supply of money available for purchasing by increasing the federal funds rate. Doing so makes earning money hard and expensive to obtain.

The question of “how stocks would react when interest rates rise” is essential for many market participants. Interest rates can have a significant impact on the price that investors are willing to pay for varying asset classes. For instance, investors tend to prefer lower risk and high yield investments like bonds over stock.

Truth be told, increasing federal funds rates does not directly affect the stock market. The institutions who borrow money from the Fed are directly affected by these rates. However, I cannot deny the daunting ripple effect.

Since it costs more to borrow money from the Fed, financial institutions (e.g., local banks) often increase the rates they charge for the clients to loan money. Individuals are affected through elevation in credit card and mortgage interest rates.

CHASING THE MONEY

Stocks and other asset classes such as bonds, real estate, and cash are in a constant race for the investors’ capital. Theory states that investors should not pay up for stocks when interest rates are high. Firstly, businesses experience decreased consumer spending and increased cost of borrowing money. Secondly, bonds and other asset classes such as fixed deposits are seen as more attractive.

On the other hand, when rates are low, it makes sense to bid up stocks. Bonds are not capable of generating a decent return during this time. Everything comes down to the risk-reward profile of the investment. When interest rate rise, the risk-reward for bonds become more attractive as the yields are higher than when interest rates were lower.

CONSUMER BEHAVIOR

Changes in the interest rates can have diverse effects on the consumers’ spending habits. It depends on a number of factors including projected rate changes, consumer confidence, and overall health of the economy.

Image Credits: pixabay.com

As an illustration, consumers may be influenced to spend less money if they believe that the purchasing power of their dollars will be eroded by inflation.

BOTTOM-LINE

Movement in interest rates can affect both the investors’ and the consumers’ sentiments. Investors will be worried about the asset classes that they will partake in. Long-term investors know that these changes will only affect the prices of their assets in the short run. However, short-term investors know that these rates are significant.

Let us move on to the consumer behavior. Consumers tend to borrow more when rates are low and save more when rates are high. They must decide when to save or spend money.

Image Credits: pixabay.com

Economist Mark Skousen once said:

“The reality is that business and investment spending are the true leading indicators of the economy and the stock market. If you want to know where the stock market is headed, forget about consumer spending and retail sales figures. Look to business spending, price inflation, interest rates, and productivity gains.”

Sources: 1, 2, 3, 4, & 5

What’s the ONE thing you should do?

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