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What is the difference between debt and equity investments?
What is the difference between debt and equity investments?
Gretchen Lirio avatar
Written by Gretchen Lirio
Updated over a week ago

Our investments are typically structured with debt or equity or a combination of the two. These approaches offer different risk and return profiles:

Debt

Debt investments in real estate entail providing loans to property owners or project sponsors. In this capacity, you assume the role of a lender, offering financial support for property development or acquisition. Debt investments are often favored for their lower risk profile. Unlike equity investments that involve ownership, debt investors receive regular returns, usually in the form of interest payments. This predictability in returns can provide a stable financial foundation with the added benefit of being cushioned against potential losses.

Equity

Equity investments in real estate are essentially about ownership. When you choose equity, you become a part-owner of the property itself. This means you share in potential rental income when the property is occupied. What's exciting about equity is the long-term potential it holds—the property's value can appreciate over time, offering the possibility of significant rewards if you decide to sell it for more than your initial investment.

When deciding between debt and equity, it all boils down to your risk tolerance and financial goals. Debt is known to provide stability and protection, while equity offers ownership and growth potential. Your choice should align with your unique investment preferences, objectives, and time horizon.

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