Real estate investment groups (REIGs) offer investors the opportunity to invest in real estate, like student accommodation, directly. However, they do so without the major expense and hassle that typically goes with direct real estate investment.
In this article, you’ll learn what REIGs are and how they work in student housing.
REIGs are groups of investors who pool funds to invest in real estate to generate an income.
A REIG offers investors to earn a consistent, passive income from multiple properties without managing the properties directly. This is one of several potentially lucrative strategies for investing in student housing.
You can find REIGs to invest in by searching online, but many real estate investment scams exist. You’ll find reputable REIGs through trusted investing platforms and real estate associations. You can also attend real estate seminars to get recommendations from real estate experts.
REIG group members contribute funds, which are pooled to acquire real estate.
This can involve flipping or renting out properties, or even developing/redeveloping properties for sale or leasing. Profits are distributed to private investors or reinvested to expand the portfolio. REIGs generate income from real estate debt on mortgages, property rentals, and property sales.
The group typically hires property management companies to manage their student accommodation investments.
A REIG may have any business structure, but a partnership or corporation is the most common. A management team makes the strategic investment decisions.
Novice investors often get confused between REIGs and REITs because both offer student housing real estate investment opportunities. That said, real estate investment trusts (REITs) are highly regulated, publicly traded companies.
REITs are legally required to pay out 90% of their taxable income as dividends. REIGs are not. If you think a REIT is a better choice, we recommend reading our tips for investing in student REITs.
Real estate investment groups have both advantages and disadvantages. Consider these before making your final decision.
Perhaps you’re still undecided whether or not a REIG is right for you. The good news is that there are real estate investment groups for all property sectors, and there’s one to suit every type of investor.
Commercial real estate investment groups invest in commercial properties like malls, office buildings, and hotels.
Some commercial REIGs include student properties in their portfolio, as student housing is also a type of commercial property. Like hotels, student properties provide accommodation but are also run as businesses, earning regular rental income for owners and investors.
Residential REIGs focus on residential properties like houses, condos, and apartment buildings for rental income.
Because it provides students with housing, student accommodation is also a type of residential property. Therefore, residential real estate investment groups sometimes include student properties in their portfolios.
If you’re interested in investing in a niche market, choose a specialized REIG. Specialized REIGs invest in specific types of real estate, such as student housing, retirement villages, or medical centers.
A REIG exclusively targeting student housing may have more experience in student property investment. You can diversify your student housing investment portfolio by investing in different types of student housing.
Rental income is not the only way REIGs earn money.
Property development REIGs invest in the redevelopment of existing properties and the construction of new ones. They earn a profit on the sale and/or lease of student housing and other properties after development.
Retail REIGs invest in retail stores, both standalone stores and those in malls. Industrial REIGs invest in industrial properties such as factories, manufacturing and processing plants, and warehouses. Mixed-use REIGs focus on properties with commercial, residential, and retail spaces under one roof.
Although not focused on student housing, investing in retail, industrial, and mixed-use REIGs allows you to diversify your investments. There’s another good reason why you should invest in retail in university towns. Stores near student housing properties will typically have a high influx of student shoppers.
Mixed-use properties that include both student accommodation and retail are therefore potentially very profitable investments.
Successful and profitable REIG investment is easier with these best practices.
Your risk profile is influenced by your tolerance for risk and your financial ability to absorb risk. Find a REIG that matches your risk profile. If a REIG typically targets high-risk investments, it’s not the right one for you.
A REIG that invests in student housing is a good fit for moderate or low-risk investors seeking financial stability. Student housing demand remains high. That’s why student housing is considered more resistant to economic factors than other investments.
Of course, demand is only one side of the coin. There has to be a supply to meet the demand. To better understand this, read our article about supply-demand dynamics in student housing.
Before making a financial commitment, ask the right questions. What is the group’s investment strategy and risk profile, and how do they handle losses? What about their management and fee structure? Do they have a proven track record?
Their answers will help you decide whether or not the REIG is right for you.
According to Forbes Business Council members, portfolio diversification and data-driven decision-making are significant real estate investment trends to watch. There is also a higher demand for eco-friendly, energy-efficient, sustainable properties.
Choose a REIG that offers diverse investments and can interpret the relevant data. With College House, you’ll access all the student housing market data, trends, and insights you need for diverse and savvy investing.
With real estate investment groups, investment in student housing is simpler and more affordable. However, regardless of which student housing real estate investment you choose, you need actionable data and market insights.
Property owners, managers, developers, and real estate investors choose College House for student housing data analytics, intelligence, and market reports. It’s time to make the data work for you. Book your demo today.
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