For people that do not want to be involved in an REIT however, the family unit can also provide a wealth of pooled property investment opportunities.
The concept of teaming up, spreading the work, and the power of many being stronger than any individual has been around for centuries. When it is applied to financial matters, the rewards are not simply a completed project, or a job well done, but rather more money for everyone. That's the idea driving the popularity of REITs in recent years, but also the tradition of close knit families building businesses that support each other, providing for several generations into the future.
REITS are basically mutual funds which invest in real estate instead of stocks or other or financial instruments. They purchase properties and then collect the rental income while also gaining through the properties appreciation. Many different groups branch off and create REITs, such as real estate players with large assets and substantial backing, or other mutual fund houses.
REITs dole out dividends based on the income earned through rents. Each property that is owned is regularly assessed which is used to calculate the net asset value (NAV) much in the same way mutual funds calculate their own NAV price. Different from mutual funds, REITs announce their NAV price on an annual basis and not daily.
Much in the same way REITs pull money from many sources to become financially stronger, families who work together and pull their own financial resources to help one another are generally financially more stable than those who do not.
Considering the current average price of a home in the U.S. being $340,000, many young adults are unable to afford buying a home without leveraging either a large portion of the cost or all of it. Parents and other family members who help each other purchase homes take into consideration the earning power of all parties involved. This will enable everyone to start on the path to a pattern of property buying and ‘laddering up’ to higher home purchases – with more appreciation.
Both REITs and families helping each other out financially are based on the same concept, and many people would do well following their basic underlying principles.