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Unlocking Opportunities: Advantages of Diversified Real Estate Funds VS a Real Estate Syndication

Unlocking Opportunities: Advantages of Diversified Real Estate Funds VS a Real Estate Syndication

When it comes to investing in real estate, there are many options available. One popular option is investing in a real estate syndication, which involves pooling money with other investors to purchase, manage, and operate, typically a single real estate asset, with those funds. This puts all the exposure into one asset. However, an alternative option that has been gaining popularity in recent years is investing in a diversified real estate fund. 

Firstly, a diversified real estate fund provides investors with exposure to a range of different properties and locations, which can help to mitigate risk. When investing in a real estate syndication, the success of the investment is tied to a single property or development project. If something were to go wrong with that particular project, or regional area (like a hurricane), investors could potentially face significant losses, or delay returns. However, a diversified real estate fund spreads investments across multiple properties, property types, and geographical locations, reducing the impact of any single loss.

Secondly, investing in a diversified real estate fund can provide greater liquidity compared to investing in a real estate syndication. Real estate syndications typically have a fixed investment horizon, which can range from several years to over a decade. This means that investors may be required to tie up their capital for long periods of time…not to mention you can’t start cash flowing on an apartment syndication until there are tenants that are paying rents…which means while the purchase and rehab is being done…you are sitting at home crossing your fingers.

In contrast, a diversified real estate fund typically allows for more flexibility in terms of when investors can buy and sell their shares, providing greater liquidity. For example, Aspen Sage has access to dozens of properties (residential, commercial, and the mortgage notes for both) every month that we are able to commit to which is how Aspen Sage is able to start paying interest 24 hours after investor deposits are made. 

Another common conversation we have with newer investors is that real estate syndications often require a high minimum investment, which can be prohibitive for some investors. Diversified real estate funds, on the other hand, often have lower minimum investment requirements, allowing a wider range of investors to gain exposure to the real estate.

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