Ownership of land and properties has long been established as one of the most secure forms of personal wealth. In a modern portfolio, real estate can offer several advantages over other types of investments, including market stability, inflation hedging, and diversification. Real estate can also deliver regular supplemental income and sales profits that exceed stock market averages. There are several avenues to pursue if one wants to add real estate to their holdings, so what’s the best option?
Real estate investment generally falls into the categories of passive or active investment, referring to the right or obligation to manage and use the assets. Passive investors put their money in Real Estate Investment Trusts (REITs), Real Estate Exchange Traded Funds (RE ETFs), and crowdfunding projects, while active investors engage in flipping, holding rental properties, or investing in second homes for the appreciation value and use. There are several considerations for both types of investments.
On the plus side, a passive investor:
- Doesn’t have to deal with any of the work associated with buying or managing properties
- Will have a full-time asset manager balancing the mix of investments to optimize income
- Has high liquidity; meaning they can sell at any time
On the other hand, many of the benefits of property ownership are not available to a passive investor:
- There is no option for personal property use
- An investor has no say in where or which properties are purchased
- Investing in a fund is not actually investing in a property, so there are no tax benefits
Active real estate investors receive several benefits over passive investors;
- They can choose specific locations and homes that fit their vision
- They can use, rent, trade or otherwise encumber their properties
- Investors have access to multiple tax benefits
However, this type of investment requires a significant commitment of resources that may not be practical for most:
- Purchasing investment properties requires a substantial amount of time to research markets, identify and purchase a property, facilitate upgrades, then market and rent or sell a property.
- High upfront expenses, carrying costs, management fees, and home maintenance expenses can make the prospect of owning multiple homes financially impractical for part-time personal use.
- Rental vacancies, platform fees, licencing fees, and management fees can substantially decrease the return, and renter misuse and damages can compromise the value of your investment.
Laurian was designed to solve these issues. As Limited Partners in a holding company, investors are relieved of the burdens of management and liability, but receive the benefits of property ownership, including use, flow-through taxation, and appreciation. Partners have a say in where properties are purchased next and what types of properties the holding company invests in. The greatest benefit may be that the partners own a share of the tangible assets held by the company. Investments are secured by the value of the real estate in the portfolio. It’s the perfect solution to real estate investment.
