BUS2204 - Learning Journal 8 PDF

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This is a learning journal assignment for the course BUS2204 - Personal Finance...

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Distinguish between direct and indirect investments in real estate. As stated by Formigle (2016), direct real estate investment is an investment where the investor owns and manages the property. Examples of direct real estate investments include commercial property, rental property, and undeveloped land, all of which provide additional rental income and tax benefits (Siegal & Yacht, 2009). Indirect real estate investment, on the other hand, is an investment in which an investor purchases stock in a fund or privately held company that owns and manages the property. There are four ways to make an indirect investment: through a syndicate, limited partnership, real estate investment trust, or mortgage-backed securities (Siegal & Yacht, 2009). A syndicate is a group of individuals who band together to own property and act as an intermediary for indirect investment by hiring professionals for the properties they own. A limited partnership is one in which other than general partners there are limited partners with limited liability that are not personally liable for the partnership's obligations beyond their initial investment. A real estate investment trust (REIT) is a corporation that invests in real estate and operates similarly to a mutual fund for real estate investors in practice. Lastly, mortgage-backed securities (MBS) are similar to bonds in that their return is guaranteed by mortgage payments on a pool of mortgages. Identify at least two main ways to invest in real estate indirectly in your country. In Italy, there are two primary possibilities for indirect investment: closed-end real estate funds and REIT (Paradisi, 2021). According to Siegal & Yacht (2009), closed-end funds are structures that issue a limited number of shares and allow new investors to purchase shares only from existing investors. On the other hand, as stated by Paradisi (2021), REIT in Italy are called SIIQ, and their name can be translated as Listed Real Estate Investment Company. There are various types of REITs, including those for equity funds. Numerous REITs are referred to as equity REITs because they invest directly in real estate. Mortgage REITs either provide mortgages to homeowners or invest in mortgage-backed securities (MBS), whereas Hybrid REITs combine the two strategies. Word Count: 333

References Formigle, I. (2016, February 24). What are the differences between direct and indirect (REIT) real estate investments? CrowdStreet: Online Commercial Real Estate Investing Platform. https://www.crowdstreet.com/resources/topics/investing/directindirect-investing Paradisi, F. (2021, July 12). L’investimento immobiliare indiretto [Indirect real estate investment]. Paradisi Consulting. https://paradisiconsulting.com/linvestimentoimmobiliare-indiretto/ Siegal, R. S., & Yacht, C. (2009). Personal Finance. OpenStax. https://resources.saylor.org/wwwresources/archived/site/textboo ks/Personal%20Finance.pdf...