FIIs or investing directly in real estate, which is more profitable?

For those who are looking for an extra income, financial reserve or even to live off of it, the investment sector is a very good alternative. The most reliable options, such as buying FIIs or investing in real estate , raise doubts about where to start and which is the best method to follow.

There is no right or wrong, it all depends on your goals and characteristics as an investor, so it is important to understand what these two options are and how they work, which lead the category of reliable investments with a good return.

What are real estate funds?

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FIIs consist of a group of people with the same objective of investing in real estate assets. This investment is made through the Stock Exchange, where the investor profits from the appreciation of the shares purchased in the Fund, within the Stock Exchange.

He can also profit from the income that was distributed by the fund manager, he is the one responsible for managing the money that all investors deposit in the shares, he determines which investments are interesting, and makes the investments in them, which keeps the fund with a good profitability.

There are a few different types of funds, and other ways of making investments , such as through real estate securities, which have letters of credit or real estate receivables certificates.

Find out what types of funds there are

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Brick funds focus on physical ventures, usually through commercial properties. They give you the option of investing in the acquisition, construction and rentals, and once ready, these properties are rented out. The FII benefits from the distribution among the shareholders of a monthly income from these rentals.

On the other hand, we have the paper fund, where you can invest through financial securities that are part of the real estate market, where the profit comes from sales or from the interest and dividends that these securities pay, investing in shares of other funds, LCI, CRI and real estate receivables securities.

Finally, we have the funds of funds, as the name suggests, these investors focus on shares in other real estate funds of any type, so they can have access with just one investment, to several other funds.

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Is direct investment in real estate more worthwhile than FIIs?

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This method is a favorite among many investors, mainly because it has been part of this market for so long and is still a safe and profitable option. Real estate investments provide a great return in the long term and provide diversity for your entry.

This market consists of the purchase, sale and rental of properties of any nature, whether residential or commercial. Some people get confused by mixing this type of investment with real estate funds, but they are different.

Here you are the owner of your property so it will not necessarily be part of the real estate investment fund. There are many advantages in this area, but all points, negative or positive, must be considered.

FIIs have market, liquidity, vacancy and default risks, most of which are not very recurrent, while the risks of direct investment in real estate come from devaluation, economic crisis and market, all of which exist and must be considered before choosing your investment method, mainly because they are factors that are independent of you.

The biggest differences between these two options are the investments required. While FIIs are much more flexible with values, purchasing a property requires a higher investment, which can lead to commitments with financing or loans.

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So? Did you understand how these markets work and what type of investment is best for you?

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