—— On the afternoon of June 3, The State Council of the People’s Republic of China issued the “Opinions on Accelerating the Cultivation and Development of the Housing Rental Market” and announced a series of new policies. The “Opinions” expresses that it encourages the promotion of real estate investment trust (REIT) pilot projects, on the one hand, guiding private funds to participate in commercial real estate; on the other hand, encouraging developers to sell exclusively for rent. In short, lower the threshold of commercial real estate investment, turn heavy assets into light assets, let the house be used, and let the capital flow.
What is REIT？
REIT (Real Estate Investment Trust), the real estate investment trust fund, is a way of issuing fund equity certificates to pool the funds of a wide range of investors, and a specialized real estate investment institution will conduct real estate investment, operation and management, and combine the income from the investment , An industrial investment fund distributed to investors in proportion.
In the early 1960s, REIT was established by legislation in the United States Congress, mainly through the securitization of real estate and fund-raising from many investors, so that ordinary investors without huge capital can participate in the real estate market with a lower threshold and obtain market transactions, Income from rent and appreciation.
The risk-and-return of REIT generally lies between other stocks and public bonds. On the other hand, due to the characteristics of its real estate underlying assets, REITs are particularly advantageous in fighting inflation.
As China’s current real estate financial market is relatively lagging and related policies are also unstable, there is still a long way to go to improve the REIT system.
Unlike China, after the establishment, the U.S. REITs market ushered in a wave of rapid development in the 1990s. More and more real estate properties are securitized through REITs, such as Walmart, Rockefeller Center, and even prisons or real estate owned by the government has all been securitized and become public property investments.
Difference between a REIT and a private equity fund
Similar to REITs, small private equity funds also provide many retail investors with an opportunity to participate in real estate investment, allowing them to participate in real estate markets regardless of capital and geographical restrictions, but investing in private equity funds in the United States requires non-foreign investors to have the qualifications as Accredited Investors.
The main difference is that when investing in real estate investment trust funds, investors do not know and cannot choose specific investment projects. Many small private equity issuance and management platforms will securitize individual projects through crowdfunding so that investors can invest in real estate projects they like according to their preferences. The online investment platforms of such small funds often provide investors with a transparent and controllable investment process and provide investors with more diversified choices.
Summary
Whether in the United States or China, many people are unable to participate in high-yield commercial real estate projects due to insufficient funds and a lack of professional knowledge.
Even if they wish to invest in REITs, they are discouraged due to the relatively high intermediate costs and the opaqueness of the project.
In order to open up new channels for real estate investment in North America and allow the idle funds of a large number of small and medium investors to flow flexibly and efficiently, CrowdFunz came into being.
CrowdFunz team has many years of experience in real estate investment and development in New York and is composed of professional legal, financial, tax, real estate, and IT experts.
We hope to use the Internet and local resources in the United States to lower the threshold, diversify risks, and provide a platform for everyone to easily invest in US real estate and obtain stable dollar returns.