English For Real Estate: Real Estate Investor Types: Part I

English For Real Estate: Real Estate Investor Types: Part I

Private investors, asset managers, REITs?
Real estate investors come in different shapes and sizes. Today I’m going to talk
about some of the most prominent types of real estate investors. Hey everyone,
this is Jennie from Real Estate English Academy, the place for real estate
professionals to boost their English! Today, in part one of our three-part
series, I’m going to talk about different types of real estate investors. We’ll
look at what these investors do, and I’ll give you some specific terminology that
you can use to boost your English when talking about real estate investment. But
before we dive in, please subscribe to our channel and hit the bell button to
turn on notifications if you want to see more videos like this one. And if you
want to test your knowledge of investor types, click on the link in the video
description and take our quiz! Let’s start off by talking about the
difference between private and institutional investors. The term
“institutional” refers to investors that invest on a large scale. Typical examples
include mutual funds and investment banks. Institutional investors typically
exhibit high liquidity, which means they have a lot of money available for
investment, and the capital they invest is not their own, which means they are
investing on behalf of other people. Private investors are frequently also
referred to as retail investors. Private or retail investors are private
individuals who are looking to invest their own money. Private investors might
purchase properties for themselves to live in, or, if they have more capital
available, might invest in several residential or commercial properties,
which they typically hold to earn regular income. In some cases, private
investors might be high-net-worth individuals who
are able to invest on a large scale. Many high-net-worth individuals, however, do
not handle their investments themselves but instead turn to an asset management
firm or a family office. Family offices are private wealth management firms
specifically dedicated to managing the funds of high-net-worth individuals.
Family offices provide end-to-end outsourced solutions, which means they do
it all from advising, managing finances and handling investments. The advisory
services offered by family offices include matters such as budgeting,
insurance, donation, business and wealth transfer services. Today. there are two
main types of family offices: single family offices and multi family offices.
Single family offices are the more traditional form and focus on providing
all of these services to just one high wealth individual or family. Multi family
offices provide services to multiple families and are becoming increasingly
popular, perhaps in part because they tend to be the less expensive option, as
they’re able to tap the synergy effects created from doing the same tasks for
multiple clients. Now let’s talk about asset management firms. Asset management
firms manage funds for both private and institutional clients. Asset management
is the systematic process of developing, operating. maintaining, upgrading,
acquiring and selling assets in the most cost effective manner. Asset managers
make well-timed investment decisions on behalf of their clients to grow their
clients’ finances and portfolios and to maximize income. They also seek to
diversify their clients’ portfolios in order to reduce cluster risk. Reducing
clusters means focusing on a variety of investment categories like different
types of real estate, stocks, bonds and commodities so that their investments
are not grouped together as a cluster in one category, making those investments
less susceptible to market fluctuations. The last type of real estate investor
we’re going to talk about today are real estate investment trusts or REITs. REITs
were introduced in the United States in the 1960s as a way to enable investors
to buy shares in commercial real estate portfolios and participate in the income
generated by a variety of different properties. Their structure is similar to
that of a mutual fund, which is open to both large and small investors. Most
REITs are structured as equity REITs, which buy, own and manage income
generating properties. Equity REITs take the money provided by investors and
use it to purchase and, in many cases, manage or improve real estate that is
let to tenants who pay rent, thereby generating the income that is
then distributed to the investors. Equity REITs often focus on a specific real
estate segment, such as a certain industry or region, but some may offer a
more diversified portfolio. Another type of REIT is the mortgage REIT, or mREIT.
Mortgage REITs focus on lending money to property owners and operators, either
directly via mortgages and loans or indirectly by acquiring mortgage-backed
securities. The third type of REIT is the hybrid REIT, which combines both income
generating properties and mortgage loans. Because these are a combination of
equity and mortgage REITs, hybrid REITs give investors the opportunity to
participate in multiple types of risk. Already familiar with one or more of
these investor types? If so tell me about your experience in
the comments below. Thanks for watching and don’t forget to apply the terms
you learned today to your own real estate English. See you next time!


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