Types of Real Estate

Mortgage Income Fund (MIF)

A MIF is a company that lends mortgages from an invested pool of money. Mortgages are secured against real property, and income results from interest on a diversified pool of mortgages (the same way a bank generates income). A MIF is a flow-through investment vehicle that distributes 100% of its net income to shareholders.

Mortgage Lending (Individual)

Individual mortgage lending applies an invested pool of money to a single property. The investment is secured against real property, with the investor’s name registered on the title. The risk is slightly greater than a MIC because mortgage lending lacks a diversified pool of properties.

Land Banking

Land banking involves purchasing shares of undeveloped land and holding onto them until they become valuable to sell. The investor owns the property and relies on inflation and the market to increase the value. When buying land through a company, investors will want to determine how much markup is applied – plots may be sold far above market value.

REIT (Private)

A Real Estate Investment Trust (REIT) is a pool of capital used to purchase income-producing real estate assets. The structure is similar to mutual funds for the stock market. Income generated by the real estate investments translates into income for investors. In a private REIT, the share price is reflective of asset values, and opting in or out relies on private transactions.

REIT (Public)

A public REIT functions the same as a private one, but the share price is set by the public market. Opting in or out involves publicly buying or selling shares.

Land Building/Development

Land building/development involves buying land and developing it to increase its value. Growing markets provide the best opportunities. Although development is generally a long-term strategy with the largest payouts at the end, investors may be able to share in project profits and earn interest during development.