Real Estate investment trust, collective investment scheme in Ukraine
Коллективное инвестирование в недвижимость

Real Estate investment trust, collective investment scheme in Ukraine

Real estate investment trust, collective investment scheme, a fairly young direction, which is at the stage of development in Ukraine. The financial education of people continues to actively improve, both in Ukraine and in many European countries. This gives impetus to the development of investment products and opportunities for profitable capital investment. Today, many entrepreneurs already know about investment funds or, as they are also called, “investment pool”.

Let’s try to figure out what is Collective Investing in Real Estate? How to invest money to make a profit? Where to invest money and how to does it right?

Pooling of capital and joint investment

Many people know that the easiest way to make money on real estate investments is to buy an object and then rent it out. In addition, this object, if it is already in your ownership, can be resold, after capital or partial improvement, which increases the value of the asset and its liquidity. To be able to buy larger residential and commercial real estate, additional financial resources are needed. There are several ways to raise capital for the purchase of real estate, for example, start raising additional funds using a special platform that can unite the capitals of investors. Depending on the conditions of interaction between fund participants, this type of capital formation can be called “collective inversion”.

Such investments will be especially profitable for novice investors who do not want to take risks, but want to quickly make money on their investments. Indeed, investing in such funds does not require a lot of capital.

Collective investments are a combination of funds of citizens and legal entities that transfer their capital to trust management of one of the companies to obtain common benefits.

Almost everyone in Ukraine can become a co-investor, which is much more profitable than investing in commercial real estate on their own. Mutual funds are becoming the most popular today. They are mainly used by young entrepreneurs who do not have a lot of capital, but have big ambitions and a desire to make money. Entering this niche, they need to have about 30 thousand hryvnias of their own capital, and for a start this is quite enough.

Why is collective investment so popular?

There are several reasons why collective investment has become so popular. If there is a large investment project, then it is difficult to implement it yourself. That is why several investors come together to successfully complete the project and get joint benefits.

Each such project has a certain level of risk, which is why it can be difficult for one person to fully invest in it. And if several partners invest, the risk of capital loss will decrease, along with the efficiency of work in achieving corporate goals.

The so-called “entrance ticket” to various types of activities can reach several billion dollars. In other words, there are many investors who want to invest, but not everyone can afford to set aside a certain amount of capital and create a sufficient budget to launch a company, product or service.

Organizational forms of collective investment

In Ukraine at the moment there are several forms of collective investment at once, for example:

Investment organization, or partnership.

  • Consumer partnership.
  • Credit organization.
  • Investment bank.
  • General Fund for Banking Management.
  • Non-state pension fund.
  • Joint stock investment fund.
  • Specific investment fund.

A joint stock investment fund is a joint stock company. The activities of such an organization must be licensed by the state. Investors receive great benefits in optimizing taxes or are completely exempted from paying them until the time the money works in an investment fund.

Non-state pension fund. They are like government pension funds. They accumulate the pensions of their owners and participants in the entire process. Then they can attract management companies that are looking for promising investment projects to make a profit.

Investment banks. Unfortunately, this type of investment is still developed only in economically developed countries and is not active in Ukraine.

Credit society. Such a society is part of a consumer credit society. A consumer society as a non-profit organization can be created to organize an enterprise (conventional or innovative), it will satisfy the needs of its contributors in the development of goods or services. The collective investor, who is also the investor, will receive income from such participation in the form of a share when leaving the consumer society, or income can be obtained by reducing his share to a certain permissible level.

Collective investment in commercial real estate or promising and highly liquid projects is a rather challenging process. Investment funds continue to develop actively on the Ukrainian market. To understand everything, you need to understand many financial instruments. Therefore, choosing and entrusting your financial assets to a specialized investment company can be a profitable decision for a beginner and even an experienced investor. The main advantage is high guarantees of making a profit, portfolio diversification, opening larger props that are not available with little capital.

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