Real estate is one of the most popular and lucrative investment options for many investors. However, investing in physical properties can be challenging, costly, and risky. You need a lot of capital, expertise, and patience to buy, maintain, and sell real estate assets. Moreover, you may face issues such as low liquidity, high transaction costs, legal hassles, and market fluctuations.

But what if you could invest in real estate without owning any property? What if you could diversify your portfolio across different types of real estate assets and geographies? What if you could enjoy regular income and capital appreciation from your real estate investments?

This is where 584 funds and REITs come in. These are pooled investment vehicles that allow you to invest in a portfolio of income-generating real estate assets, such as office buildings, shopping malls, hotels, warehouses, etc. By buying units of these funds, you can get exposure to the real estate sector without the hassles of direct ownership. You can also benefit from the professional management, tax advantages, and regulatory oversight of these funds.

In this blog post, we will explain what 584 funds and REITs are, how they work, what are their benefits and risks, and how you can invest in them.

What is the 584 Fund?

A 584 fund is a type of common or collective trust fund (CIF) that is established by a bank or trust company to pool the assets of various trust accounts for investment purposes. A CIF is a tax-exempt entity that operates under the Internal Revenue Code Section 584 and the OCC Regulation 9.18.

A 584 fund can invest in various types of real estate assets, such as mortgages, equity interests, or debt securities. The fund can also invest in other CIFs or mutual funds that invest in real estate. The fund distributes the income and capital gains to the participants based on their proportional share of units.

A 584 fund is suitable for investors who are looking for a diversified and professionally managed portfolio of real estate assets. The fund can offer higher returns than traditional fixed-income investments, as well as tax benefits and lower fees. However, a 584 fund also involves some risks, such as market risk, liquidity risk, credit risk, and operational risk.

What is REIT?

A REIT (real estate investment trust) is a company that owns, operates, or finances income-producing real estate properties. A REIT can be listed on a stock exchange or traded over-the-counter (OTC). A REIT must distribute at least 90% of its taxable income to its shareholders as dividends.

A REIT can invest in various types of real estate sectors, such as office, retail, residential, industrial, hospitality, etc. A REIT can also invest in mortgages or mortgage-backed securities (MBS). A REIT can be classified into three categories based on its business model:

• Equity REIT: This type of REIT owns and operates real estate properties and generates income from rents and capital appreciation.
• Mortgage REIT: This type of REIT lends money to real estate owners or invests in mortgages or MBS and generates income from interest payments and fees.
• Hybrid REIT: This type of REIT combines the features of both equity and mortgage REITs and invests in both properties and mortgages.

A REIT is suitable for investors who are looking for a steady source of income and diversification from their real estate investments. A REIT can offer higher dividends than other stocks or bonds, as well as capital appreciation potential. Moreover, a REIT can offer tax benefits, liquidity, transparency, and regulatory protection. However, a REIT also involves some risks, such as interest rate risk, market risk, leverage risk, and management risk.

How to Invest in 584 Fund and REITs?

To invest in a 584 fund, you need to have a trust account with a bank or trust company that offers such funds. You can choose from various types of 584 funds based on your risk appetite, investment objectives, and time horizon. You can buy or sell units of the fund through the bank or trust company at the net asset value (NAV) of the fund. You can also transfer your units to another trust account or beneficiary.To invest in a REIT, you need to have a brokerage account with a broker or a platform that offers such securities. You can choose from various types of REITs based on your risk appetite, investment objectives, and time horizon. You can buy or sell shares of the REIT through the stock exchange or the OTC market at the market price of the REIT. You can also reinvest your dividends or sell your shares for capital gains.

Conclusion

Investing in real estate can be a rewarding and profitable venture, but it can also be challenging and risky. If you want to invest in real estate without owning any property, you can consider 584 funds and REITs as alternative options. These are pooled investment vehicles that allow you to invest in a portfolio of income-generating real estate assets, with various benefits and risks.

Before investing in 584 funds and REITs, you should do your research, compare and analyze the performance of different funds, and understand the tax implications and regulatory requirements. You should also consult a financial advisor or a tax professional to help you make informed decisions based on your financial goals and risk tolerance.