Overview of real estate investments
The most common way to use real estate as a capital investment is to buy apartments or houses directly.
Real estate shares
Real estate shares are an alternative. These are share certificates of companies in the real estate industry that develop, produce, manage and market the properties. These can be large construction engineering companies, real estate brokers, housing associations or professional property management companies.
Real estate bonds
Behind the concept of real estate bonds or. Mortgage bonds hide fixed-interest securities that are often secured by real estate liens. In all other respects this is a normal debt security. Unlike real estate shares, which represent equity in the respective real estate company, bonds are debt capital.
They should not be confused with Pfandbriefe: Although Pfandbriefe also provide the acquired buildings with real estate liens in favor of the investors. However, most real estate bonds are subordinated – in the event of insolvency, the other creditors are served first. In the case of Pfandbriefe, on the other hand, creditors have first-ranking security.
real estate funds
In the case of real estate funds, professional investors – fund managers – collect the money and then invest it in several properties. Due to their experience, the managers can usually generate a high yield. Investors can choose between open-end and closed-end funds.
Open-ended real estate funds have many properties in their portfolio. In addition, they usually have an unlimited investment volume. This means that the fund assets keep growing as new investors come in with new money. This also means that, in principle, you can resell your shares at any time.
With closed-end real estate funds, on the other hand, the volume is limited.
When all shares are sold, they are closed. You then have to hold your fund shares until the end of the term. They also often invest in only one or two properties, such as hospitals, hotels or shopping centers.
Real estate crowdinvesting
Recently, the real estate crowdinvesting as a way to invest money is in vogue. Instead of raising a lot of capital for a property, this involves joining forces with many other private investors via an internet platform and investing together as a "crowd" in individual construction projects. This already works with small amounts and thus also enables small investors to invest in larger real estate projects. This type of investment, known as mezzanine capital, was previously reserved only for large professional investors. Today, private investors also benefit from the high interest rates of up to 7.5% per year.