Actual property vs actual property funds: which is one of the best funding? – 01/06/2022

Buyers searching for passive revenue typically flip to the true property market, whether or not they’re shopping for rental properties or shopping for belongings akin to shares of actual property funding funds (REIFs). As it’s nonetheless an incipient market in Brazil, actual property funds are off the radar of most Brazilians, presumably as a consequence of their inexperience within the funding world. Historically inherited from grandparents and great-grandparents, many individuals nonetheless desire to purchase and even construct a rental property.

Nonetheless, there are a selection of things that should be considered earlier than investing a great amount of cash in a property with the intention of incomes further revenue every month. Relying in your profile and objective, this will not be one of the best various.

Subsequently, it is very important know different less complicated methods to earn a living by investing in the true property market and FII is an alternate that have to be thought-about by these searching for belongings with larger liquidity and profitability. Rafael Bevilacqua, chief strategist and founding associate of Levante Ideias de Investimentos, talks concerning the matter beneath.

Know the FII

The analyst says that the very first thing the investor should be mindful is that this class of investments falls underneath variable revenue, that means the shares of those funds can fluctuate in worth.

Nonetheless, actual property funds are considered as much less risky funding choices than different variable revenue modes, akin to shares, as a result of they intention to offer passive revenue to the investor by passing month-to-month quantities within the type of dividends.

“Every stake capabilities as a small slice of the FII, and receives a portion of the revenue supplied by the belongings which can be a part of this fund’s portfolio,” Bevilacqua says.

Actual property funds are divided into completely different segments, relying on the kinds of belongings by which they allocate their sources. Initially, we will divide the fund market into 4 broad classes:

1) Brick Funds: Put money into the acquisition of actual property to earn from the rental of those belongings.
2) Improvement Funds: Investing in actual property tasks to revenue from the sale or rental of properties after completion.
3) Paper funds – make investments their belongings in monetary belongings associated to the true property market, akin to Actual Property Credit score Certificates (CRI), Mortgage Letters (LCI) and Mortgage Coupons (LH).
4) Funds of Funds (FOF): purchase shares of different funds, in search of to deliver larger diversification to the investor’s portfolio.


To measure the common yield provided by rental properties, an indicator referred to as hire yield is used, which is the ratio between the common rental worth and the common sale worth of the properties.

In keeping with the FipeZAP + Rental Index, the common rental yield for renting residential properties in Brazil was 4.73% every year in February 2022. Within the case of economic actual property, the yield was 5.58% every year. in the identical vary.

Because of this for each BRL 100,000 invested in property in Brazil throughout this era, the common annual rental yield was roughly BRL 4,700 for residential properties and BRL 5,500 for industrial properties.

Within the case of actual property funds, common profitability is measured by the dividend yield, calculated by dividing the dividends paid to shareholders by the unit worth of a fund’s shares.

As of February this 12 months, the IFIX (B3 Actual Property Funding Funds Index) common dividend yield was 8.8% every year, that means for each BRL 100,000 invested in actual property funds over the interval, the common annual yield was 8,800 BRL.

“And better of all, FII revenue is exempt from revenue tax assortment,” Bevilacqua says.

Diversification and liquidity

Along with profitability, different components that each investor should contemplate earlier than deciding the place to allocate their cash are diversification and liquidity, in accordance with Rafael Bevilacqua.

“After we discuss diversification we discuss with the flexibility to divide your belongings between completely different belongings, with the intention of lowering danger publicity and taking advantage of the varied alternatives that the market provides”, says the knowledgeable.

“When investing instantly in actual property, it turns into harder to diversify your portfolio when you do not have a multimillion-dollar asset, as the worth of a home in Brazilian capitals begins at R $ 200,000. To not point out that sure classes of belongings actual property properties, akin to industrial and logistic ones, have a tendency to start out at a lot greater costs, making them inaccessible to peculiar traders “.

Within the case of actual property funds, it’s potential to construct a really diversified portfolio with out having a big sum to take a position. Actual property fund shares are individually traded and begin at costs beneath R $ 10.00, with most funds buying and selling between R $ 50.00 and R $ 200.00 per share.

Bevilacqua states that, as well as, it’s potential to construct a portfolio with shares of FII that put money into completely different segments of the true property market, akin to procuring malls, actual property credit, logistics warehouses, amongst others, with the intention to reap the benefits of one of the best in every class. .

Liquidity refers back to the ease of changing a given asset into money. “Finally, it’s possible you’ll wish to promote a few of your belongings to get the cash from the transaction, and everybody is aware of how bureaucratic and time-consuming the method of promoting a property will be,” says the analyst.

“Within the case of actual property funds, you may choose those which have the best liquidity to complement your portfolio, after which, should you finally wish to promote half or your entire shares, you may full the operation in seconds, utilizing your dealer of securities. “

Constructing a legacy with FII

Solely a minority of traders who’ve already managed to build up appreciable wealth handle to have just a few hundred thousand reais to purchase actual property as a type of funding, that’s, there’s a nice barrier to entry into this market.

“If you’re a novice investor excited by constructing wealth, actual property funds additionally supply an excellent benefit: you may make investments small month-to-month quantities with the long-term in thoughts. As well as, you may maintain the dividends paid from the shares of the funds you may have in your portfolio and use them to purchase. new actions, on this method you may speed up the method of multiplying your belongings “, says Bevilacqua.

There are advantages, however it requires care

The analyst says that actual property funds supply a number of benefits over investing in actual property, akin to greater common profitability, larger liquidity and a wider vary of choices for constructing a diversified portfolio with a deal with incomes revenue. passive.

“However that you must know the best way to separate the wheat from the chaff: not all actual property funds are good funding choices and people with low-quality belongings of their portfolios could make you lose,” he says.

Levante’s really helpful portfolios embrace a few of the actual property funds that the overview home considers good choices in the mean time. Are they:

XP Malls FII (XPML11), within the procuring middle phase.
Tellus Properties (TEPP11), within the company sheet phase.
CSHG Logística (HGLG11), within the phase of logistics warehouses.
Kinea Renda Imobiliária (KNRI11), which operates within the segments of company plates and logistics warehouses.

Entry Levante’s full report on actual property funds right here.

Portfolios by profile

For individuals who have not picked up the funding suggestions but, they’re beneath:

– Portfolio for many who take no danger

– Portfolio for many who have a extra conservative profile, however settle for a small danger

– Portfolio for the extra reasonable

– Portfolio for many who settle for extra dangers

– Portfolio for many who settle for excessive danger

We wish to discuss to you

Take note of your e-mail notifications, as a result of if there may be any change in your portfolio, you’ll be notified.

The each day bulletins ready by Bevilacqua additionally comply with, with evaluation of the macroeconomic situation and firm information. Obtain this text daily earlier than the market opens to start out the day with the knowledge you want. Nonetheless not receiving emails? Join the UOL publication right here.

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