Are you looking at options for investing in multiple residential properties at once, rather than going through the process of purchasing one property at a time? If so, you’re not alone. For many investors, buying individual properties can be a time-consuming and resource-intensive process. However, an option exists that may allow investors to scale and diversify their real estate investments more efficiently, referred to as “block investing.”
When acquiring a group of properties at once, investors can benefit from economies of scale, diversifying their portfolios while streamlining their investment process. Similarly, accredited investors can put capital to work inside of a fund that may invest in multiple properties. This approach to real estate investing may offer certain advantages over purchasing properties individually.
Buying Individual Properties vs. Multiple Investment Properties at Once
When considering real estate investments, one of the key decisions investors face is whether to allocate capital toward individual properties or invest in multiple properties simultaneously – which is often done through a real estate fund. Purchasing individual properties has its merits, allowing for a more focused hands-on approach, where investors can carefully manage each asset and make strategic decisions based on the unique characteristics of every property. However, this method can be slow and requires significant time, effort, and transaction costs for each purchase.
On the other hand, block investing allows investors to buy multiple properties at once or participate in real estate developments, which may offer several key advantages. For example, it can reduce the time spent on due diligence, paperwork, and negotiations, as the transaction is typically consolidated into a single deal. This may save investors time and effort, potentially allowing them to scale their investments more efficiently. Additionally, block investing offers the potential for bulk discounts, as sellers may be willing to negotiate more favorable terms for a group of properties. This may result in a lower cost per property, potentially increasing the investor’s overall return on investment (ROI).
Investing in multiple properties at once also may allow for greater diversification within a real estate portfolio. By spreading investments across different properties, investors can mitigate risks associated with any one asset underperforming. This diversification can be particularly valuable during economic downturns or shifts in the housing market, as a varied portfolio has the potential to provide a buffer against losses in specific areas.
These same advantages may be realized when investing with a real estate fund. Real estate funds may offer even more diversification, as investors may own a share of many more properties than they would be able to purchase on their own.
Types of Residential Real Estate Block Investments
Block investing can take several forms, depending on the type of real estate and the investor’s goals. Here are a few common types of residential real estate block investments that provide both opportunities and flexibility for investors:
Communities / Neighborhoods Development
One of the most common forms of block investing involves purchasing multiple properties within a newly developed community or neighborhood. Real estate developers sometimes sell these properties in bulk to investors before construction is completed, offering a chance to buy in at lower pre-construction prices.
This type of investment allows investors to gain exposure to an entire development, which can be particularly beneficial in high-growth areas where demand for housing is expected to rise. As the neighborhood develops, property values would ideally increase, providing upside for investors. In addition, owning multiple properties within a single community can simplify property management, as maintenance and tenant services can be consolidated, further reducing costs and increasing profitability.
Multiple Home “Flipping”
For investors interested in flipping homes for a quick profit, block investing can also be an attractive strategy. Rather than purchasing and renovating one home at a time, investors can acquire a portfolio of distressed or undervalued properties in one transaction.
This approach may allow investors to benefit from economies of scale when it comes to renovation and improvement costs. Contractors, labor, and materials can be hired or procured in bulk, with the goal of reducing overall expenses and increasing the potential for profits once the homes are sold. Additionally, purchasing multiple homes at once with the goal of flipping them for a profit may allow investors a more consistent income stream than flipping one home at a time, as any individual renovation may face unforeseen problems and delays.
Real Estate Funds
Another option for block investing is participating in a real estate investment fund. These funds pool capital from multiple investors to purchase large portfolios of properties, which can be renovated and sold, rented for income, or further developed. There are many different types of real estate funds that invest in different mixes of residential and commercial properties, so investors can search for one that seems like a good fit for their needs.
These funds are typically managed by professional real estate firms, making them an attractive option for investors who want to participate in block investing without managing the day-to-day operations themselves. As stated before, real estate funds can also offer investors even more diversification, as they may have fractional ownership of many more properties than they could afford to purchase on their own. Worth noting, many of these real estate funds are only open to Accredited Investors.
Block investing in residential real estate may offer a scalable and efficient way to grow a real estate portfolio, providing investors with the potential to acquire multiple properties in a single transaction. Whether investing in community developments, flipping multiple homes, or participating in real estate funds, block investing has the potential to provide financial benefits while reducing time and effort.
The investment information provided by this Blog Post is for general informational and educational purposes only and is not a substitute for professional advice. Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals. Domicilium does not guarantee the success of any investment recommendations or strategies discussed or provided by this Blog Post. The use or reliance of any information contained on this blog post is solely at your own risk.
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