A real estate investment group is a business that buys properties and then sells them to investors as rental properties. The group manages the properties for the investors, taking care of details such as finding tenants, maintenance, upkeep and security. These firms profit by charging the investors a portion of the monthly rents they collect.
Many investors choose to invest with a real estate investment group rather than buying properties on their own because they can derive most of the financial rewards of owning rental properties without having to invest the time and money needed to manage them. Real estate investment groups also offer investors the benefit of diversification. The investor is able to own multiple properties through a single investment, much like investing in mutual funds rather than purchasing individual stocks.
Many real estate investment groups have a provision in their contracts requiring investors to pool a certain portion of their rent proceeds to cover vacancies. These groups deal solely with investment properties, which are defined as those that the owner does not intend to occupy as a primary residence. The owners of the investment properties hope to generate income not only through rent but also through price appreciation.