What are real estate bonds?

Real estate bonds are an attractive form of investment for those who want to invest in real estate without the associated liabilities. These bonds allow investors to enjoy the benefits of real estate without being directly involved in its management and maintenance. Let's discuss further what real estate bonds are and how they work.

What are Real Estate Bonds?

Real estate bonds are debt securities issued by real estate companies or funds such as Valvest.io, usually to raise capital for specific real estate projects. In exchange for the capital investors provide, they receive interest payments over a set period of time and ultimately the repayment of the amount borrowed (the principal) at the bond's maturity date.

How do Real Estate Bonds work?

1. Issue and Purpose: Real estate bonds are issued to raise funds for various real estate projects. These can range from residential properties to commercial properties. The company, such as Valvest, determines the amount they want to borrow through the bond issue, along with the interest rate and term of the bond.

2. Yield: Investors who buy real estate bonds receive monthly interest payments over the life of the bond. The yield on real estate bonds can be attractive because of the typically higher interest rates compared to other investment methods. This is partly because of the risk associated with real estate investments.

3. Risk: As with any investment, there are risks associated with real estate bonds. These include the risk of default by the issuing entity, interest rate risks (changes in interest rates that can affect the value of the bonds), and market risks that can affect the value of the property being invested in. Fortunately, at Valvest, these risks are mitigated by various collateral, such as the right to rental income and the option to purchase through a foundation.

4. Repayment: At the end of the term of the bond, the principal is repaid to the investors. With Valvest, you also receive a repayment bonus depending on the amount invested."

Conclusion

Real estate bonds can be a valuable addition to a diverse investment portfolio, offering attractive yields and the opportunity to benefit from the growing real estate sector.

If you are interested, at Valvest you can invest as little as €100 in Spanish real estate bonds with yields of up to 12% and various security rights.

Find out more about Valvest here >