January 21, 2022

How to invest in real estate?

Learn about the different ways to invest in real estate and where Brxs fits in.

Now that we have covered the benefits of investing in real estate and how real estate can be a great addition to your portfolio by making it more diversified, stable and profitable. Let’s get a bit more pragmatic and look at all the different ways you can get started in real estate and where BRXS fits in:

REITs


A REIT is basically a company that acquires, sells and manages real estate properties. As an investor you can buy a share in a REIT and your capital is used to buy properties. In return, you as a shareholder will receive dividends coming from the rental income generated by all the properties in the REIT. REITs come in many different shapes, forms and flavours:


So REITs offer an easy way to get access to real estate investing for those investors who want to remain very hands-off and prefer to have a very broad diversification across many real estate areas and geographies. Publicly traded REITs are also very liquid: you can easily buy and sell shares whenever the markets are open from your brokerage account.  When choosing a REIT, it is important to properly assess its attributes, just like you would research any company you would want to buy a stock in because they can vary in terms, returns, diversification, duration, and more.


While they have their advantages, it is also important to evaluate their drawbacks:

Crowdfunding platforms


Crowdfunding platforms connect investors with real estate developers who want to finance their projects either through debt or equity. In return investors hope to receive regular distributions and/or share in the gains (or losses) at the end of the project. The platform is usually merely an intermediary and takes a fee on the distributions between investors and developers. 


These platforms have brought some democratisation and allow for a lot more input and control on the side of the investor to decide what they want to invest in: a country, city or neighbourhood that is appealing to them, a project that they see as a great opportunity or a real estate developer they believe in. Often the promised returns also look really good; in some cases going well above 10% per year. 


Be vigilant and remain mindful of the many pitfalls as high “promised” returns often come with a significant amount of risk: The platforms often take little responsibility and as an investor you depend on the trustworthiness and reliability of the developers. The timeline or feasibility of projects can change drastically negatively impacting your pay-outs, returns or even the reimbursement of your investment. On some platforms the developers are not even professional companies but individuals looking for financing to flip a property. So a good amount of research and due diligence is definitely necessary to avoid sleepless nights. 

Do it yourself


The good old-fashioned way of investing in real estate is by going at it completely yourself: sourcing a property, buying it, renovating it, managing and renting it out or selling it for a higher price. And as a result making a great return on your investment. It is definitely a proven method as many great investors in history have built their wealth and created financial independence through real estate. It is also something that resonates with many of us because we probably all know examples from people in our family, circle of friends and acquaintances in the neighbourhood that have had their success by owning and renting out one or more properties.


While the doing it yourself method provides you a lot of control, flexibility and freedom and it is definitely exciting, the reality is that for many of us it is just not very accessible and attainable for several reasons:


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BRXS


While the above ways each have their benefits and have worked for some, we started Brxs because we couldn’t really find ourselves in those options:


So we built BRXS trying to get as close as possible to do it yourself, while reducing the barriers to get started. So with BRXS, we allow users of our platform to invest in residential rental properties of your choice:


What are the advantages?



While we have made BRXS to make real estate investing more accessible, attractive and transparent, It is important to understand that all BRXS investments still come with risk just like all other forms of investing. The returns you make are variable and can be influenced both positively as negatively by factors such as the housing prices or property specific events like the insolvency of a tenant or an unexpected maintenance that falls outside the planned budget. You can read more about risks in the next article, our dedicated risk FAQ and also find a comprehensive overview of the most important risks in the AFM information document of each property.

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