fbpx

3 Benefits of Investing in a Debt REIT Vs. an Equity REIT

3 Benefits of Investing in a Debt REIT Vs. an Equity REIT

There are many benefits that come along with investing in a debt (or mortgage) REIT versus an equity REIT. But before delving into those benefits, it is vital to know the difference between the two. An equity REIT makes investments in and acquires properties within the realm of commercial real estate. The revenues of this type of fund may be generated through rent collected from tenants and businesses. On the other hand, Debt (or mortgage) REITs lend money to real estate buyers in the form of debt which may include mortgages. So, unlike equity REITs, mortgage REITs generate revenue on interest earned on debt instruments such as mortgage loans. The ZINC Income fund, for example, is a debt (or mortgage) fund with a sub-REIT feature. But what does that mean for a potential investor? Don’t worry! In this blog post, we will cover 3 specific benefits of investing in a Debt REIT, like the ZINC Income Fund.

  1. Less sensitive to economic calamities- Debt REITs historically withstand periods of recession and uncertainty within the economy because they hedge against inflation. But equity funds are more cyclical and tend to be far more sensitive to economic uncertainty.
  2. Steady and predictable- Debt funds are usually more predictable than equity funds. This is because equity funds come along with a higher aspect of risk in hopes of a higher long-term profit. While a debt fund is less risky and yields stable returns.
  3. Shorter time commitment- Debt funds, like the ZINC Income Fund, tend to have a lockup period of about 2 years. While equity funds can have a holding period of up to 10 years. So if you tend to have a lower appetite for long-term lockups of your hard-earned cash, a debt fund is probably right for you. 

If investing in a debt fund sounds like the right choice for you, click here and become a part of the ZINC Income Fund. For more information about the fund and its offering call us today at (559) 326-2509. 

RELATED POSTS

RELATED POSTS