WHY PRIVATE EQUITY REAL ESTATE FIRMS ARE OVERTAKING TRUSTS

It has recently been estimated that among high-net-worth individuals, approximately 33 percent of their portfolios are currently made up of real estate holdings. Among those, a large percentage is made up of private real estate equity, typically including properties that the individuals are involved in managing on a daily basis, even if they have hired a professional management company to do the dirty work.

However, there is still a high demand for hands-off real estate equity investments. Many investors with large amounts of capital looking to diversify into significant real estate holdings are having trouble because there has previously been no middle ground between outright private ownership and the completely passive investing experience offered by real estate investment trusts, also known as REITs.

Many people simply don’t have the time, skillset or the inclination to jump headlong into managing commercial properties, even if the majority of tasks can be effectively delegated. That has left those with significant investment capital who would like to diversify into real estate grappling with the many shortfalls of REITs, at least until now.

Private real estate equity firms are gaining in popularity, and these firms have some huge advantages over REITs. The types of properties that typically make up a private equity real estate portfolio are office buildings, industrial properties, retail shops and multifamily apartment buildings. There are also specialized investments such as elderly and college dormitory housing, hotels, self-storage units and medical buildings, to name a few.

One of the reasons that people are drawn to this type of investing is that private real estate equity companies don’t suffer from the immense pressures that REITs are under to produce dividends. This means that they are under no obligation to quickly acquire properties when they are cash-rich but property-poor. A private real estate equity firm can sit on a pile of cash for as long as it chooses to do so. And this means that the well-run variants of this company structure never have to make questionable purchases in overbought markets. It also means that they can hoard cash, optimally positioning themselves to pounce when genuine market opportunities arise.

Additionally, REITs have become notorious for consuming large amounts of the funds’ capital through fees and costs. This has caused a steep decline in the amount of money being invested in the REIT market. Private real estate equity firms, on the other hand, can often maintain high levels of both vertical and horizontal integration, keeping all management, maintenance and construction functions in-house. This can dramatically reduce the costs associated with middlemen and outsourcing.

This article was originally published on http://matthewgorelik.co

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The Future of Digital Fundraising

As strange as it may seem, raising money online is still in its infancy. The legal ramifications of crowdfunding have just recently been faced squarely by regulators and governments and the next steps in both capital formation and non-profit and charitable giving are right around the corner. With the steady stream of news articles about online funding scams, it’s no surprise that people are still so hesitant to use this medium. From stories of funerals and hospital bills to tales of woe, there’s currently no regulation in place to protect prospective donors. The companies with the biggest stakes in the fundraising future are obviously the social media platforms, which are in a headlong race to deploy front-ends for all manner of crowdfunding features.

The success of non-profit organizations is entirely dependent on budgeting and efficiency. For donors, patrons, and the companies they support, things have to become more practical. Since non-profits and technology go together so well, there are some new concepts you should consider looking into if you plan to raise money in the near future.

Equity Sharing

Commercial companies are bound to discover that equity will be the killer feature in any crowdfunding project going forward. Capital markets discovered the wealth-building power of equity sharing decades ago, and while governments can’t and won’t allow future online capital markets to become a free-for-all, the tools now exist to not only realize the dream of buying a share of your dream project but also to automate and regulate such projects. This is not only for the benefit of shareholders but also for the overall growth of electronic commerce.

Digital Currencies

Non-profits and charity fundraising efforts are very likely to become early adopters of digital currencies for a number of reasons. One of the primary motivators will be the robust and unalterable record-keeping of the blockchain, which will lead to a more exact record-keeping of tax deductions, as well as disclosures on people’s charitable giving. A cottage industry is likely to spring up around this feature of the blockchain, alongside several companies that will work with non-profits to invest or spend the digital coins they have collected.

Virtual Assistants

Advertising, marketing and customer service are among the numerous obligations that smaller non-profit players would love to either outsource or automate. With the emphasis on chatbots and virtualized customer care platforms now underway in technology circles, online services will soon combine with listening applications like Alexa, Google Assistant and Cortana to produce a “reassurance engine” that will not only prevent ejections by nervous contributors but turn them into repeat and upsold contributors instead.

 

This article was originally posted on http://matthewgorelik.info

CAN PHILANTHROPY IMPACT SUSTAINABILITY

Philanthropic activities have changed in recent periods such that philanthropists are more focused on ensuring that they support sustainable factors and improve the environmental conditions surrounding them. There is a significant number of non-government organizations involved in philanthropic activities to impact sustainability. Here are some essential charitable activities that actively support sustainability efforts.

Funding Tree Planting
Tree planting is one of the most critical activities falling under the category of sustainability. It plays a crucial role in preserving the environment. Trees prevent soil erosion and add nutrients to the soil for agricultural production. There are thousands of philanthropic activities directed towards tree planting in a bid to protect the environment. Other advocacy plans have already been developed to prevent tree felling.

Ocean Cleaning
One of the most significant environmental challenges that the world is facing pertains to the disposal of waste materials into the oceans. There are thousands of companies that direct their sewerage into the ocean, creating an unsafe environment for aquatic wildlife and humans alike. There has been an emergence of not-for-profit organizations engaging in fundraising efforts that aim to rid oceans of pollution and plastics.

Clean Energy Production
Increase in energy demand for corporate and domestic consumption has led to a significant increase in production using water and coolants. These methods, however, are considered unsustainable as they interfere with water supply while increasing the level of harmful gases in the atmosphere. A large number of non-government organizations are encouraging the use of alternative methods of energy production. Examples include the funding of wind power energy which is considered more sustainable.

Gabion Constructions
Gabions are important physical structures that play a critical role in preventing soil erosion while at the same time preventing water from moving at a higher speed leading to the destruction of properties. A large number of organizations have been involved in corporate social responsibilities that include the construction of gabions and other barriers that prevent soil erosion.

Organic Farming
One of the leading causes of environmental destruction is the use of chemicals in agricultural production. Many large plantations use fertilizers which harm the soil and the microorganisms that call it home. However, a large number of organizations have been raising funds to support organic/biological farming which eschews the use of harmful chemicals.

This post was originally published on matthewgorelik.info

Understanding Real Estate Terms Part Two: M-Z

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Originally published on MatthewGorelik.io

Welcome to this month’s continuation of Understanding Real Estate Terms. We covered A-L in August with Part One. Now it’s time for Part Two!

Real Estate terms can be confusing, especially when you’re knee-deep in a process you are unsure of. Use this glossary any time you stumble across a term you don’t recognize!

Multiple Listing Services (MLS) – This is a special database available only to real estate agents and brokers. Industry professionals have the opportunity to submit listings and information to the database, effectively allowing them to search and compare listings beyond the scope of their own practice.

Points – The concept of points can be somewhat tricky. At it’s most basic, it is a fee paid to the lender in an effort to reduce the interest rate on your mortgage. The fee is equal to 1 percent of the total amount of the loan.

PITI  – An acronym that stands for Principle, Interest, Taxes, and Insurance. Together, these items make up the primary costs associated with most mortgage payments.

Preapproved – Preapproval is only obtained after a lender conducts an in-depth review of the borrower’s financial background. It is only obtained after completing a thorough application, paying the required fees for processing, and submitting any documentation requested by the lender. If the application is approved, the buyer receives a “conditional commitment” from the lender for a particular loan amount. It does not guarantee that the loan will be issued.

Prequalified  – Prequalification is the process of having a lender or specialist determine how much a particular buyer can afford to borrow. It is not an in-depth review and it does not guarantee that a loan will be granted. It merely serves as a starting point for the buyer to realistically assess property.

Private Mortgage Insurance (PMI) – This is a type of insurance for the lender. It serves to protect them in the event that the encounter a loss on the money they have lent (if a borrower defaults on their loan, for example). Lenders require this insurance be purchased on any conventional loan without a 20 percent down payment.

Rate Lock – An agreement between the lender and the borrower that states a specific interest rate and a predetermined length of time. The specified interest rate will be guaranteed for the indicated length of time, meaning it can not increase or decrease as market rates do.

Title Insurance – An insurance policy designed to pay out if the the property title defects or is subject to other title complications after the closing has been completed. Depending on the situation, it may be paid to the lender or the buyer.

Under Contract – Under Contract is a term given to any for-sale property that has accepted an offer, but not yet closed or met contingency requirements.