When Private Real Estate Investments Make Sense

Real estate, and more specifically commercial real estate, has become a more prominent part of high net worth investor portfolios in recent years.

As the volatility of more traditional investment vehicles like stocks and bonds rear their heads, causing uncertainty throughout, accredited investors have sought alternative means to grow their capital and preserve their wealth.

PLAYING THE LONG GAME

Real estate has and will always be the tried and true method to financial wealth. Unlike stocks, however, instant liquidity and the ability to sell at any time is not an option. As a result, when committing to real estate investments, it’s the long game that counts. This is due to the overall holding strategy and business plan that real estate investments require.

After all, real estate values tend to go up over time, and time is the name of the game. For example, instant cash flow is possible with any great real estate investment and with the right investment manager, but the overall cash return as well as that big dreamy equity split most likely will not happen until at least 5 to 7 years into the investment. As a result, if you can invest funds you won’t need in the immediate future, real estate can provide you with a more than terrific vehicle for growing your wealth, while producing cash flow along the way.

“Real estate will have the highest number of up years and the lowest number of down years compared with stocks and bonds.”

NOT FALLING FOR THE WHIMS OF THE MARKET

Public investments can be affected by such things at what’s going on in Europe, whether Democrats or Republicans are currently in charge of the government here, or just the general whims of the market. While you’re limiting your risk in terms of individual stock or bond performance, a portfolio entirely invested in the public markets will still be exposed to general market risk and fluctuations.

Is there a national real estate market? Sure, but not really. In terms of residential and commercial properties, trends and markets are localized. What happens in this city is different from that city. What happens in this state is different from that state. What happen is this metropolitan area is different from that metropolitan area…so on and so forth. Real estate then, as you can see, is better insulated from the whims of the market.

WHEN INVESTING IN REAL ESTATE MAKES SENSE, BUT YOU LACK THE TIME OR EXPERIENCE

Many high net worth investors are actually very interested in expanding their portfolios to include private real estate holdings because if done right and in the long term, this can lead to considerable, even generational wealth.

But what happens when you neither have the time or the experience? Well, that’s when you can lean on a partner like us, because all of our time and focus goes into this arena.

IN CONCLUSION

When all is said and done, to expand and grow your portfolio, and to preserve capital and wealth, real estate investments can be a very smart choice. Due to the reasons above, it’s why ArrowNext Capital exists, and it’s why we do what we do. We love it, but more importantly, we’re good at it, so let our success be your success.