Guide about Close-End Real Estate Mutual Fund
Large investors generally trade independently at the individual level with those who need a capital injection. However, not everyone has enough funds for independent activities. If you still want to invest, people will unite in a special structure. We will discuss one of them, the Closed Investment Fund.
The Intro:
First, let's see what a real estate investment fund with real capital. It is the name of a real estate complex created without a legal entity. It consists of the assets of various investors transferring funds to the fund. They then became owners of their shares.
The Fund's assets have the legal status of co-ownership. Therefore, the results of its activities are distributed to the participants. By the way, when a closed investment in real estate is created, not only the cash but also the rights to property such as buildings and land can be transferred there.
What’s the difference?
Why create additional types of infrastructure debt fund? This is due to the need to promote many operations. When discussing closed financing, there is an advantage in this case that participants can make decisions about activities at the shareholders' meeting. The main difference between closed investment funds is the inclusion of property rights as assets.
In other words, the main operations are carried out on residential and commercial buildings, land, etc. In this case, two types are distinguished classically. The former is mutual fund mutual funds.
They specialize in financing various real estate structures. The second type is a closed investment fund. He specializes in real estate leasing. Usually the one he built. In other words, the feature is affordable for various operations, transferring different types of activities, and many other things being done in the real estate market (buying and selling houses, business buildings, land, etc.).
Effect on Finance and Construction Industry:
Recently, end-users (ie people planning to live and work in new apartments and buildings) have provided up to 80% of real estate. Therefore, in many cases they only need 10-20% of the necessary funds when they start construction.
This is enough for the start of the fence and earthwork. At the same time, personal or moral or mortgage loans were calculated.
In a way, it's a condominium. The operating principle is as follows: we sell different apartments and build the first floor. Then we wait for someone to buy. In this case, the first buyers took a huge risk, after all, they could wait until the work was completed.
The plan has only one drawback: there is no control over targeted funding. This often turns into a noisy scandal and fake shareholders become victims.
The enactment of Federal Law 214-FZ allows us to begin absorbing consumer capital. At the same time, it is understood that it must be replaced by something. Otherwise, the amount of construction will fall and house prices will rise just around the corner.
According to legislation (No. 214-FZ), credit (banking structure) and investment funds (CIF) are allocated to construction.
Although there are some nuances. Therefore, the state can protect its citizens, even if it liberates the banks from this market sector. What has happened is that the legislation of the Russian Federation has established a common standard of responsibility for financial institutions and promoters. The objective is to make institutional investors a guarantee for the completion of the transaction.
Work specifics
Therefore, although not mandatory, we have considered the information, but it is still important to understand it. Let's see how these structures work in practice. For example, let's invest some money in closed rental housing in the Holy Land. Therefore, to participate in the process of creating a new house (or other real estate), ZPIFN bought real estate from the developer. Equity agreements (or investments) are used as the basis for posting.
The management company then sends the funds available to the promoter and obtains the right to have a specific object (such as an apartment) with specific parameters (such as the target or height) in its assets when construction is completed. But what should I do if I receive the property? This is determined by the management company of the closed investment fund.
It should be noted that the promoter can start financing only after all the necessary permits have been issued in the manner prescribed by law. This is done to prevent investment funds from participating in the most dangerous phase of construction.
But this is not critical as up to 15% of the total cost is borne by the design and creation of projects of all documents. Connections to closed-end mutual funds allow developers to receive conventional large-scale, large-scale investments needed for construction and installation work, as well as for the creation and development of technical communications.