Understanding the world of real estate investment can be daunting, especially with the complexities of property management and the substantial capital requirements that are required to get started in direct property investment.
There is a compelling solution to benefit from investing in real estate without the headaches—Mortgage Real Estate Investment Trusts (mREITs).
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What are mREITs?
Mortgage REITs (mREITs) are vehicles that provide an opportunity to participate in the real estate market without the rigors of buying, managing, or flipping properties personally.
mREITs specialize in mortgage investments. They can either extend loans directly to real estate owners and operators or acquire mortgage-backed securities.
mREITs earn income from the interest collected on mortgage loans or the appreciation of mortgage-backed securities, such as commercial or residential loans in both the conventional and private money lending spaces.
Now that we’ve laid the foundation, let’s explore why mREITs—such as Marquee’s Capital Fund 1—should be on your radar for a diversified real estate investment strategy.
MREITs offer a myriad of advantages that make them a compelling choice for investors looking to diversify their portfolio with real estate and generate passive income without the burdens of individual property management.
Diversification = sound investing.
This has been a maxim for investors for a long time, and mREITs allow you to spread your investments across a spectrum of mortgage-related assets.
Such diversification minimizes risk by reducing your exposure to the performance of any single property or borrower.
With Marquee’s Capital Fund 1, you gain access to a diversified portfolio of mortgage securities carefully curated by our experts, ensuring a balanced and resilient investment approach.
Unlike direct real estate investments, where property owners must contend with maintenance, tenant issues, and property management, mREIT investors enjoy a hands-off experience.
By investing in mREITs, you leave the day-to-day management of real estate assets to our seasoned professionals. This frees up your time and eliminates the hassles and stress associated with property management.
Acquiring physical properties often requires substantial upfront capital, making real estate inaccessible to many investors.
The Marquee Capital Fund 1 breaks down this barrier, allowing you to start your real estate journey with a lower threshold of investment—$50,000 minimum; and enter the real estate market with confidence, even if you don’t have the resources to purchase properties outright.
Perhaps one of the most attractive features of mREITs is the passive income they generate.
Through our mREIT fund, you can enjoy regular income in the form of dividends from the fund, which is sourced from interest payments from mortgage loans and returns from mortgage-backed securities.
This passive income can provide financial stability, serve as a retirement supplement, or be reinvested to add the benefits of compounded growth to your investments.
There are key differences between Mortgage Real Estate Investment Trusts (mREITs) and direct real estate investments. The right approach depends on your financial goals and risk tolerance.
- Tangible asset ownership: Direct real estate investments grant you ownership of physical properties. This can be appealing as you have direct control over the asset and its potential for appreciation.
- Leverage: Real estate investments often allow for the use of leverage, meaning you can purchase properties using a combination of your own capital and borrowed funds. This leverage can amplify returns if property values increase.
- Tax benefits: Investing in real estate offers numerous tax deductions for mortgage interest, and the property provides significant financial benefits.
- High capital requirement: Acquiring real estate properties typically demands a substantial upfront investment, making it challenging for many investors to enter the market.
- Management and maintenance: Direct ownership entails responsibilities such as property management, maintenance, and dealing with tenant issues, which can be time-consuming and require expertise.
- Lack of diversification: Your investment is tied to specific properties and locations, potentially exposing you to greater risk if a particular market or property underperforms.
- Downsizing of a real estate market and its impact on leverage. Values can go down and equity is the first to lose.
While direct real estate investments offer the allure of tangible asset ownership and potential tax benefits, they come with high capital requirements and significant responsibilities.
On the other hand, mREIT investments provide diversification, accessibility, and professional management but can be influenced by market conditions.
- Diversification: mREITs offer diversification by pooling investments across various mortgage-related assets, reducing risk through broad exposure.
- Accessibility: Investing in mREITs requires less capital compared to direct real estate investments, making real estate accessible to a wider range of investors.
- Professional management: mREITs are managed by experts who handle property selection, financing, and other complexities on your behalf, freeing you from hands-on management.
- Capital Structure Seniority: The loan is secured by real estate that, if properly underwritten, has sufficient equity to protect against downward market conditions and borrower default.
- Market sensitivity: mREITs are sensitive to interest rate fluctuations as well as changes in the real estate market, which can impact returns.
- Lack of asset control: With mREITs, you don’t have direct control over individual properties, and decisions are made by fund managers.
mREITs offer investors at every level the opportunity to invest in real estate without common hassles such as property management, high starting investment requirements, and the increased risk of tying your investment to a specific property.
With mREITs your investments are managed by experts who take care of the hands-on tasks for you, making it easier than ever to see returns on your real estate investment—without the headaches.
While mREITs are still susceptible to market fluctuations, they still have typically higher dividend yields than equity REITs and will often stay resilient during and after a market downturn.
Most significantly, mREITs generate passive income for investor portfolios, while providing capital to reinvest with and compound wealth over time—meaning that your initial investment has the potential for continued growth and earnings.
Marquee Funding Group’s mREIT, “Marquee Capital Fund 1”, combines the advantages of mREITs with expert curation to offer investors a hassle-free path to real estate wealth accumulation. It has a preferred 8% annualized rate of return.
Our integrated approach, combining origination and servicing under one roof, guarantees a concierge-like level of care and maintenance for your investments, reducing complexities and streamlining your experience.Start investing with Marquee Funding Group today. Your future self will thank you.