Hedge Fund Investing Guide 101
Hedge funds have become a new craze among the investors who are looking for higher net returns and to diversify their investment portfolio. However, before investing one should first have a basic idea of what hedge funds are all about. A hedge fund is characteristically a privately organized joint investment fund, predominantly invested in public traded securities. It is a pool of invested capital, used mainly by wealthy or financially experienced individuals and institutions. Usually, law to just 50 to 100 investors per fund restricts hedge funds. Thus, most hedge funds set very high standards for an individual to be a qualified purchaser.
Most often, an investor with a net worth of above one million dollars and an annual income exceeding two hundred and fifty thousand dollars is only considered as a qualified customer. Hedge funds are very similar to mutual funds. The difference between the two is of strategies they use. Hedge funds use a set of strategies other than investing long in bonds, equity, mutual funds and money markets. Thus, its strategies can generate positive returns irrespective of the rise and fall in the equity and bond markets.
One way to invest in hedge funds is to invest in a company just before a major merger, as shares go up significantly once the merger occurs. This technique is called ‘Risk Arbitrage’. However one should have a prior knowledge of the merger before buying large amounts of shares in a company, as it is a very high-risk investment strategy since some mergers may not occur at all. Another technique, which one may adopt while investing in hedge funds, is ‘Leverage’. This means using borrowed capital in to own capital for investment. ‘Selling Short’ is also a popular strategy where one invests in apparently undervalued securities, trading commodities and FX contracts, and takes advantage of the difference between current market price and the highest purchase price in events such as mergers.
when your goal of investing in pre-construction is to “get out” before the home is completed, your most lucrative way is to find a company does the work for you so you don’t have to!
Even though most hedge funds promise higher net returns, they are accompanied by some limitations. For instance, in case of many hedge funds, there are certain restrictions on one’s right to redeem his shares. Often, there is a lock-in period that can extend to over a year. During this period one cannot redeem his shares. Hence, one should reconsider his options and take into consideration a long-term perspective before investing in hedge funds. Moreover, hedge funds also have a higher failure rate than traditional funds. Many of them fail by the second or third year of operation. It has been estimated that about 5.7% of the existing 8500 hedge funds closed in 2005. Also, because of their non-regulation there are no official hedge funds statistics. Besides, hedge funds are more suited for large businesses because they have a price tag.
However, hedge fund is a very helpful tool for the diversification of one’s investment portfolio. It reduces the overall portfolio risk and volatility, as it is not related with the broad stock market indices. Thus it is a smart choice for those who are willing to take the risk.
Mansi Aggarwal recommends you visit Hedge fund investing for more information.
Pre-Construction Investing Frees You From Rental Repairs, Whining Tenants, and Late Payments
Being a Landlord:
Did you know that 95% of all real estate seminar attendees never do anything with the information they receive? Why is this? From experience we know that many investors shy away from becoming landlords or buying real estate long term because they are afraid of the responsibilities. Here are the top three reasons why people shy away from becoming a landlord of why they want to get out of the “landlording” business:
- Issues with repairs (older homes, tenants who break things)
- Tenant problems (late rents, law suits, vacancy issues)
- Property management challenges (irresponsible, don’t keep homes rented)
There is a better way of getting a return on your hard-earned money:
it’s called "pre-construction investing"!
What is pre-construction and how can you invest in pre-construction? Before you panic and think you have to become a developer, read on, you may be surprised at how easy it is for anyone to invest in pre-construction.
The Meaning of Pre-Construction Investing
Pre-construction investing simply means “cutting out the middle man,” buying a raw piece of land and building the home yourself.
Investing in pre-construction has quickly become a new and lucrative niche for investors who want to have their hard-earned money invested against collateral rather than the stock market or mutual funds. Many have discovered self-directed retirement plans and prefer to invest their retirement funds into real estate or do a 1031 exchange into pre-construction.
Top 5 Reasons to Invest in Pre-Construction
While there are many reasons why pre-construction makes investing in real estate easy, the top five reasons to invest in pre-construction are as follows:
- No Repairs
- No Tenants
- No Property Management Needed
- New Homes are much easier to sell than existing homes
- High Returns
How You Find Pre-Construction Properties
There are many ways to finding pre-construction properties. The most obvious ones are to consult with large developers such as KB Homes, Centex, Pulte, etc., in an up and coming area. Many investors find it challenging to find a large builder who will work with investors. An alternative is to hire your own builder and find your own construction financing, which may take a little more work than most people care to put in; however, it’s well worth the time! The easiest is to find a company who is specializing in working with investors only.
Read more about pre-construction investing at RealEstateAbundance.com.
About the Author
Françoise Merlo is the president of Dynamic Investment Solutions LLC. She is a public speaker and seminar leader and has been teaching real estate investment strategies for over three years. Dynamic Investment Solutions LLC is a developer of custom built properties in the rapidly growing State of New Mexico and her program is designed strictly for investors.
The Advantages of Lease Options in Real Estate Investing
How can you be a landlord without all the trouble? Maybe instead of a rental house you should have a lease option house.
Landlords who own single family homes may have much more to do than they bargained for. Repairs and maintenance can really add up, and suck up a lot of your profits. There are alternatives. Have you tried lease options? It’s also a great way to begin Real Estate investing.
Doesn’t it seem like you hear about lease options everywhere? You read about them in lots of real estate web sites, other ezines. What exactly is this, and is this just another get rich quick scheme?
Nope, not a get rich quick scheme, but it may help you get rich. You hear about it so much because it is a great way to work the rental business.
A lease option house. How exactly does that work? First a Lease agreement is made with the tenant, and then an option agreement gives the renter/buyer the right to purchase the property for a set price by a predetermined date. So they are leasing, and paying for an option to purchase the home later.
Let’s look at some of the advantages:
1. Your renter is planning on buying the property, so they usually maintain the property better than your average renter.
2. Your lease has the renter taking care of most maintenance. You only take care of big stuff, like roofs and furnaces. (you do have to check state laws on this one)
3. You get a non-refundable option fee up front, possibly $3,000-5,000 or more depending on your area.
4. The majority of renters never take the option and buy the home, so when their time is up, you can continue to rent to them, if they have been good tenants, you could extend their option, for a fee, or get a new renter and another up-front option fee.
Doesn’t sound like there are too many downsides to this type of plan, does it?
This works great if you want to hold property long term to build wealth. You can have occasional options fees whenever tenants move, monthly cash flow, and your renters continue to pay off your property with minimal costs.
This is all fairly simple, but there are some secrets that it helps to know. Make sure you get educated on the process, and then lease options will help catapult your wealth. A lease option house is a great way to begin investing. Lease options can be a great part of a wealth plan. You have all the income, and also all the tax benefits of rental property.
Note: There are some states that are working on legislation to limit lease options. This is because of the few unscrupulous investors that are cheating people. They give us all a bad name. As far as I know, at this writing, Texas is the only state where it is not legal, but some adaptations to the program can be made to make it legal. Consult your attorney.
Lesley Wilson is a Real Estate investor, a licensed Real Estate agent, and has also worked in the Title Insurance industry for many years. She has been investing, and helping others invest for over 30 years, and has been a licensed agent for over 15 years. She is dedicated to helping others find financial freedom through Real Estate investing, and providing them with the Real Estate Resources they need to be successful.
http://www.RealEstateResouceCompany.com.
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