Healthy Real Estate Investing for Medical Professionals

1) INTRODUCTION – THE SHOEMAKER’S CHILDREN SYNDROME

The old adage that “the cobbler’s children have no shoes” too often is so true for many Medical Professionals. They are typically so busy caring for others that they, like the proverbial shoemaker, neglect their own welfare.

This paper is intended to be a prescription for the financial well being of Medical Professionals at large — in particular Physicians, Dentists, Chiropractors and Pharmacists. You may be practising, retired or navigating on how to get there successfully — never too early or late to start!

We will cover why your investment strategy should consider including a healthy dose of private real estate backed investing as part of your investment portfolio mix. It’s all about the holy trinity of real estate investing:

  • It is a hard permanent asset and can act as a hedge against inflation;
  • It can provide a stable income stream;
  • It can balance out volatility from wild fluctuations in the public securities markets.

2) SYMPTOMS

Medical Professionals all too well know the hazards of overwork, burnout, stress, depression, difficult patients and colleagues — on and on.

The last thing you need is needlessly to pile on the stress of financial planning and the challenges (and sometimes headaches) that go with it. The good news is that there are some simple tactics you can use to ensure your financial portfolio is adequately diversified.

Younger Medical Professionals are often starting behind the eight-ball (those who play billiards know that is not especially favourable!). Earning your credentials and licence to practise took several years of hard work and sacrifice, often resulting in sizable student loans and a late start to saving.

Some, but not all, more established Medical Professionals may already own homes and cottages, have management corporations and traditional investment portfolios, which may charge management fees regardless of performance and are subject to nerve wracking levels of volatility.

Yet, there is a good chance both the fresh faced and veteran Medical Professionals are too busy and undereducated in the fine tuning of finances to take the initiatives on their own that are so vital to financial wellbeing for them and their families.

The anecdotal record suggests that Medical Professionals are not always astute investors and often are the targets and victims of nefarious promoters and highly questionable schemes. Investopedia quotes Dr. Jim Dahle, a hockey playing emergency room doctor and blogger at the White Coat Investor, who says that the common reasons that most people struggle with money apply to doctors. These include “a lack of financial literacy, poor financial discipline and a lack of long-term perspective.” “In addition, there is a bit of a culture within academic medicine where you don’t talk about financial topics,” he says.

And so, if you are financially literate or not, read on to learn about a simple framework that anyone can adopt to achieve a more diversified investment portfolio which includes alternative assets and hopefully can generate a premium risk weighted return.

3) DIAGNOSIS — THE IMPERATIVE OF A PERSONAL WEALTH PLAN

Of course, we all need sufficient capital to support our desired lifestyles, now and in the future, and in many cases that of our loved ones. These are the so-called “necessaries of life”, the levels of which will be as varied as there are different Medical Professionals.

Someone said, “The best thing money can buy is financial freedom” — Easily said, not so easily accomplished. Financial security is not automatic. Its achievement necessitates careful planning and personal discipline.

Now that you have the benefit of a secure and steady flow of patients and customers with the prospect of solid earnings and some discretionary capital, what’s next?

Creating an investment portfolio that mimics your practice! A rich capital base that produces a steady flow of income with a future prospect of growth and surplus capital to spend! Real estate as an asset class mimics such attributes and can be a cornerstone of any such portfolio.”

as of 2022-11-16

Sources:

https://www.td.com/ca/en/personal-banking/personal-investing/products/gic/gic-rates-canada/

https://www.rbcdirectinvesting.com/pricing/gic-bond-rates.html

https://www.morningstar.ca/ca/report/fund/performance.aspx?t=0P0000Q34Y

Coming up with a sensible plan designed, not only to maintain your lifestyle and wealth, but grow it for your future that includes the critical element of real estate, will take a large number of Medical Professionals into some unfamiliar territory.

Nevertheless, it is all important to your financial health to adopt a personal wealth blueprint to build your fortune and future.

This, no doubt, is the time to seek the wise counsel of your lawyer, accountant, and/or independent investment manager, but before you do so, let me give you some food for thought about why your wealth plan should consider adding real estate secured investments.

4) REAL ESTATE — A GOOD IDEA

Most of us find it axiomatic that real estate is a good idea.

After all, Mark Twain, the late famed American author, long ago advised us to “Buy land, they’re not making it anymore”. This was repeated in spirit by Louis Glickman, the famed real estate investor and philanthropist, when he said “The best investment on earth is earth.”

From the moment we stopped being nomads and “staked” claim to property, we began trading real estate. It began with lands used for agricultural purposes where the intrinsic value of the asset was realized (“Hey, we can stop wandering, grow food, get strong, and beat off the nomads!”), to housing, to commercial uses. A good idea does not die and real estate investment has been around almost as long as we have!

It’s not hard to appreciate why owning an income-producing building can potentially generate long term uncorrelated premium returns, often acting as a hedge against inflation since rental rates often correspondingly increase as incomes and inflation increase.

5) THE BETTER MOUSETRAP — BUILD A MORE PERFECT PORTFOLIO

Sticking with investments in public stock market equities and fixed income securities is often unimaginative and open to vagaries of unexpected events beyond control that can subject your savings to volatile swings in value. In 2008 and more recently this year, this painful lesson was learned again by millions of investors around the globe. There is an investment bias that many amateur and seasoned investors possess: investing in stocks and bonds is all I have to do! These are only two asset classes. When assets are highly correlated within asset class as they are in both public stock and bonds, their prices tend to move in lockstep with one another, leaving those who hold them vulnerable to dramatic market swings. Without diversification outside these two public markets, investors can be in for a wild ride! This opens the case for diversification into private markets and alternative assets, like real estate.

Here’s how the wealthiest 1% invested, based upon data from one of the largest alternative asset managers, KKR Inc.:

Why not piggyback onto the tried and true paradigm of real estate investing strategies established by major players like endowment funds, pension funds, insurance companies, and high-net-worth and ultra-high-net-worth families.

Sources:  

  • https://www.investopedia.com
  • https://www.origininvestments.com
  • https://www.investments.yale.edu/about-the-yio

6) REAL ESTATE BACKED INVESTING AS AN ESSENTIAL AND UNIQUE INVESTMENT

We differentiate from vehicles like mortgage investment corporations (“MICs”), real estate investment trusts (“REITs”), mutual funds and the like, that pool any number of projects. By real estate secured investing we mean you select the individual projects one by one.

A decent level of real estate focused investing, whether in land or buildings, in your portfolio can mitigate volatile market swings.

I will tell you why.

Real estate, for the most part, fluctuates quite distinctly from other conventional asset groups, like stocks and bonds. It has unique features. For instance,

  • Real estate is tangible and is what lawyers call an “immovable”. In other words, you can kick it.
  • It is often scarce, particularly in growing areas and provides an opportunity for appreciation in value over time.
  • Real estate is a hard asset with a potential income stream. It can allow for reasonable leverage and the miracle of compound interest.

7) THE PRESCRIPTION — THE DIAGNOSIS

“A simple fact that is hard to learn is that the time to save money is when you have some.” Joe Moore, American TV personality.

So called “best investors” like pension funds allocate 9 to 10%(*) of their entire investment package to real estate investing. Benchmark returns, with and without real estate, make a compelling argument for including real estate investing in your portfolio. See the previous sources for the Yale University Endowment Fund.

*source: https://www.wealthmanagement.com/investment-strategies/pension-funds-eye-higher-real-estate-allocations

Meaningful real estate investing can be a prescription for a healthy, well-rounded and diversified investment package designed for today’s Medical Professionals.

Medical Professionals who invest wisely in real estate type securities for the long term can enjoy an excellent diagnosis for their financial health.

8) CALLING ALL MEDICAL PROFESSIONALS — MAKE FUNDSCRAPER YOUR ALLY.

You may hear from naysayers who dispute the prudence of real estate investing, at least by those among us who might be considered neophytes who don’t know any better. Their position basically distills down to the proposition that most people, including those whose main pursuit is in the medical arena, do not have the requisite knowledge, time, or expertise. While this is cause to be cautious, Fundscraper Capital provides a seamless online solution. We will professionally handle the search, due diligence and financial analyses to aid you to assess and make decisions with the relevant data points at your fingertips and then work with you to complete your investment in compliance with relevant laws and regulations.

Simply put, let Fundscraper help you diversify your portfolio with real estate backed investing by doing the heavy lifting.

If you are more comfortable, we are quite happy to liaise with any of your trusted advisors or investment managers. Please feel free to link them to this paper and invite them to connect with us to explore how we can collaborate on your behalf.

a. Background

It is important that you feel you are in trustworthy and capable hands and not have to worry about an unreliable sponsor or nefarious investment scheme. Governments everywhere are being proactive in enacting consumer protection legislation and strict regulations are the order of the day.

Fundscraper Capital Inc. is on the leading edge of online investing. It is an exempt market dealer registered with the Ontario Securities Commission in the Province of Ontario, and equivalent regulating authorities in other Canadian jurisdictions.

Further it is registered as a mortgage brokerage with and comes under the jurisdiction of the Financial Services Regulatory Authority of Ontario.

b. Online Platform and Technology

Fundscraper is an online platform that facilitates direct private investments by qualified investors into an array of real estate backed projects and investments sponsored by proven developers and owners. You select individual projects that interest you and invest directly, rather than through a conglomeration.

Fundscraper’s cutting edge technology uses best of practice compliance standards and introduces investors to real estate investing opportunities usually reserved for institutions or deep pocketed and well-heeled, connected investors. There is a high degree of comfort, not to be underestimated, in knowing exactly what you invest into, a unique experience you do not often get when investing in private markets.

c. More than a Platform

Fundscraper is far more than an online platform.

Our team is comprised of dedicated and experienced industry experts in all facets of Fundscraper’s business.

Transparency and trust are priorities. While we do not charge for or provide investment advice per se, we put forward the pros and cons of the real estate investing opportunities listed on our website, so you can make an informed decision on which to choose.

We take substantial steps to ensure that a given investment is suitable for you. We go to great lengths to observe the regulatory rules related to “Know Your Client” (KYC) and “Know Your Product” (KYP). We have a concierge service which makes a knowledgeable, registered representative available to assist you in things you need to know to take advantage of Fundscraper’s platform for real estate investing. Being part of the select “white lab coat body of Med Pros” will entitle you to “white gloves treatment” from Fundscraper.

d. Attractive Net Returns

Fundscraper opens up select investments to a large group of qualified individual Canadian investors as established by legislation, the general intent of which is, among other things, to make real estate investing more accessible to qualified investors.

As a generalized bare bones overview only, typically these qualified investors (including their spouses) fall into the following classifications.

  1. Accredited Investors — high net worth, of at least $1 million in net financial assets or $5 million in net assets, or sustained annual income of $200,000.
  2. Eligible Investors — with an offering memorandum, $400,000 in net assets or at least $75,000 of sustained annual income.
  3. Minimum Amount Investors — corporate investment of at least $150,000 in a single investment.
  4. Permitted Client — high net worth, of at least $5 million in net financial assets, ability to waive suitability.

The precise criteria for each of these categories as defined by applicable securities laws is somewhat complex and beyond the scope of this paper. Fundscraper is standing by to help you determine where you and/or your spouse fit in.

e. Conventional Wisdom

John Kenneth Galbraith, the late acclaimed Canadian born American economist is widely acknowledged to be the father of the phrase “conventional wisdom”.

It is that precise sense of conventional wisdom combined with old fashioned common sense that dictate that you consider diversifying your investment portfolio.

Fundscraper can make diversification into real estate happen for you. Keep in mind:

  • We humanize digital investing with state of the art technology and open up private markets not usually available to a vast majority of investors.
  • You will have a real concierge desk responsible to help you at every step in the real estate investing process.
  • It isn’t hard to invest in real estate the Fundscraper way – we are primarily online and digital, but also can provide white glove services.
  • We do a lot of the work to make sure you are able to make an informed decision on what the risks and rewards are when investing.
  • Our highly experienced team underwrites and vets each deal based upon our collective management team’s experience of decades working with institutional investors.
  • We have successfully processed some $500,000,000 of transactions.
  • Fundscraper is licenced by and complies with strict governmental laws and regulations, in particular those of the Ontario Securities Commission and the Financial Services Regulatory Authority of Ontario.
  • Our systems and people will help you determine your status as an investor qualified to participate in our select real estate investing opportunities under applicable securities laws and regulations.
  • We are dedicated to building a long term relationship with all our clients and helping you to achieve your real estate investing goals through a diversified portfolio with real estate at the forefront.
  • We are a community of real estate people standing by to welcome you to the neighbourhood.
  • We standby at your direction to work with your trusted advisors and wealth managers.

Start Investing in Real Estate Backed Investments Today

Explore the investments available on Fundscraper.

Calling all Accounting Professionals – Growing Your own Wealth and That of Your Clients With Real Estate Investing

1. SOME HISTORY

First, a bit of the history of Accounting – one that is thousands of years old. Its ancient roots go back to Mesopotamia and weave through societies in India, Egypt, the Roman Empire, the countries of the United Kingdom, America and on and on.

 Early Accounting emerged from bartering and trade and was essentially a bookkeeping exercise. In the 15th Century Venice was a major centre of trade and commerce and it was there that the mathematician monk, Luca Pacioli, did the spade work for modern Accounting. His treatise, while not an invention in itself, was a digest of scholarly work to that time and which laid the footings for today’s methods of recording financial data and ultimately the birth of a proud profession.

 Through the era of colonialism, with the development of creatures called corporations and today’s global world of free and open markets, Accounting Professionals continue to be indispensable. They are the successors and gatekeepers to long tested and honourable traditions.

2. THE ACCOUNTING PROFESSIONAL’S UNIQUE PROFILE AND ROLE

Members of the Accounting Profession occupy a unique and well deserved respected place in Western Society’s business community. Enviably, they are regarded as knowledgeable and trustworthy in all things financial.

Your clients invariably rely on you for tax, insurance, estate planning and business advice. You mostly deal with people with sufficient assets and their tax returns are invariably a good place to start. Issues of corporate structure, family succession, tax drag, dividends and profits (never losses!) are some of the everyday topics you face in advising your individual clients.

 Not to be forgotten, is the role Accounting Professionals play as investment advisors. Unlike some wealth managers, you do not earn commissions and have the advantage of dispensing independent counsel.

All in all, when it comes to financial affairs, Accounting Professionals are the quintessential confidantes. 

3. WEALTH ACCUMULATION THROUGH REAL ESTATE BACKED INVESTING

Most Accounting Professionals have more than a rudimentary understanding of the intricacies of the real estate industry.

So this paper is not intended to cover what for most of you are redundant subjects. Suffice it to say:

  • Real Estate is a hard permanent asset – you can kick it;
  • Diversification of your portfolio with Real Estate backed investing will potentially balance out the vagaries and unpredictable fluctuations in public securities markets;
  • Real Estate can provide a regular fixed income steam over a set time frame; and
  • Real Estate secured Investing will ideally pay off in the long term and at the same time maintain premium risk weighted returns.

4. HYPOTHESIS

Recognizing the intersection between the two disciplines of Accounting and Financial Planning, Accounting Professionals are ideally positioned to quarterback the entire investment playbook for themselves and their clients; including liaison with other experts i.e. bankers, asset managers, stock brokers and lawyers.

You all know about the golden rules of Accounting, those Generally, Accepted Accounting Principles (“GAAP”) which form the cornerstones of the authoritative standards by which Accounting Professionals conduct their affairs.

Let’s add a new one – Help create wealth by advising clients to diversify their investment portfolios with Real Estate Backed Investments!”

CALLING ALL ACCOUNTING PROFESSIONALS – MAKE FUNDSCRAPER YOUR ALLY

Accounting Professionals are skilled with numbers, but remember the arithmetic often tells only part of the story. Strategic investing requires more and that’s where Fundscraper comes in. As the late famed American broadcaster, Paul Harvey, might  say – Fundscraper will tell you the “rest of the story”. And so let Fundscraper help you and your clients strategize wealth creation strategies with attractive real estate investments.

Please visit Fundscraper’s website at www.fundscraper.com for the full story.

In the meantime, consider the following:

  • Fundscraper opens up private opportunities for qualified investors not typically available to the vast majority of investors;
  • With Fundscraper you will be in capable and trustworthy hands. It is an Exempt Market Dealer and registered Mortgage Broker licenced by the Ontario Securities Commission (“OSC”) and the Financial Services Regulatory Authority of Ontario (“FSRA”) respectively;
  • Fundscraper uses cutting edge technology to facilitate online Real Estate focused Investing;
  • Fundscraper’s team is comprised of experienced experts in all facets of its business, who underwrite the deals with a level of care and sophistication based off of decades of institutional experience; and
  • You and your clients can access key underwriting information and make informed decisions with Fundscraper doing the heavy lifting. A real concierge desk will help Fundscraper users at every step of the way.

MAKE FUNDSCRAPER AN ALLY NOW!

Sign up at www.fundscraper.com with no obligation and receive Fundscraper’s newsletter and regular updates on available investments.

Start Investing in Real Estate Backed Investments Today

Explore the investments available on Fundscraper.

A Glossary of Real Estate Related Acronyms

Acronyms are a sort of abbreviation using initials and there are virtually hundreds of thousands. Our compendium is a short list of many of those most closely associated with real estate. 

AML – Anti Money Laundering

AMV – Affordable Market Value

APR – Annual Percentage Rate

ATF – Anti Terrorist Funding

ARM – Adjustable Rate Mortgage

AUM – Assets under Management 

BPO – Broker Price Opinion

CCO – Chief Compliance Officer in an EMD

CFE – Crowdfunding Exemption

CIM – Confidential Information Memorandum 

CMHC – Canada Mortgage and Housing Corporation 

COFI – Cost of Funds Index 

CRA – Canada Revenue Agency 

CSA – Canadian Securities Administrators 

DD – Due Diligence

DICO – Deposit Insurance Corporation of Ontario

EBIDA – Earnings Before Interest, Depreciation, and Amortization

EBIDTA Earnings Before Interest, Depreciation, Taxes and Amortization.

EGI – Effective Gross Income

EMD – Exempt Market Dealer

FICO – Fair Issac Co. (credit score)

FINTRAC – Financial Transactions and Reports Analysis Centre of Canada (money laundering and terrorism)

FMV – Fair Market Value

FS – Fundscraper 

FSCO – Financial Services Commission of Ontario (part of Ministry of Finance

FSRA – Financial Services Regulatory Authority of Ontario 

GDS  – Gross Debt Service

GP – General Partner

IIF – Investor Information Form

IIROC – Investment Industry Regulatory Organization Canada

IRR – Internal Rate of Return

ISDA – International Swaps & Derivatives Association

KYC – Know your Client

KYP – Know your Product

LP – Limited Partnership

LTC – Loan to Cost

LTV – Loan to Value

MI – Mortgage Insurance

MIC – Mortgage Investment Corporation

MLS – Multiple Listing Service

OM – Offering Memorandum

OME – Offering Memorandum Exemption

OSC – Ontario Securities Commission

OSFI – Office of the Superintendent of Financial Institutions

PITI – Principal, Interest, Taxes, and Insurance

PM – Portfolio Manager

PN – Promissory Note

PPM – Policy & Procedure Manual

REIT – Real Estate Investment Trust

ROI – Return on Investment

TDS – Total Debt Service

TVM – Time Value of Money

UDP – Ultimate Designated Person in an EMD

VC Venture Capitalist

Start Investing in Real Estate Backed Investments Today

Explore the investments available on Fundscraper.

Why The Wealthy Favour Real Estate Investing

Table of Contents 

  1. Introduction
  2. The traditional investment portfolio misses the mark
  3. The case for diversifying your investment portfolio
  4. Real estate as an essential part of your investments
  5. Invest like a big player — the 20% rule
  6. How to pursue real estate investing as an individual
  7. Summary
  8. The last word — make Fundscraper your ally

1. Introduction

Most of us might find it self evident that real estate investing is a good idea. After all, Mark Twain, the late famed American author, long ago advised us to “Buy land, they’re not making it anymore”. 

Interestingly, the New York Times recently reported that the Mark Twain Historical Centre has mildly disputed the attribution of this often quoted advice to Twain. My guess is that it probably can be sourced to an over zealous real agent unwittingly dispensing sage counsel in order to boost her commissioned income!

Of course, there are naysayers who dispute the evident wisdom of real estate investing, at least by those among us who might be considered neophytes who don’t know any better.

So let’s have a closer look at why wealthy investors will, without fail, include a good dose of real estate, whether by way of equity or mortgages, in their portfolios. 

My goal is not so much to convince readers that real estate, in itself, is a good bet, but rather to make the case for diversification of their portfolios to include a meaningful segment of direct real estate holdings.

We will cover fundamental roles private real estate plays in a diversified investment portfolio:

  • It is a hard permanent asset that will moderate risk and enhance your net worth;
  • It can provide fixed predictable returns; 
  • It will balance out unexpected wild fluctuations in public securities markets which in a worst case scenario could without notice crush the paper value of your savings at any given time; and
  • It is a source of additional benefits you won’t receive by only investing in stocks or bonds.

2. The traditional investment portfolio misses the mark

For the most part, financial professionals, wealth managers and often well-meaning friends recommend a safe pathway to balancing your investments — likely something along the lines of 60% in public stock market equities and 40% in public fixed income securities.

The idea is to mitigate risk through prudent asset allocation in various classes — stocks, fixed income (bonds) and cash.

Too often, the traditional portfolio mix fails to achieve optimum performance because of the under-representation of real estate backed investing.

3. The case for diversifying your investment portfolio

 Our thesis is that overall you will do better by putting more rather than less emphasis on solid real estate secured investing, at the same time maintaining a high degree of safety.

Most of us are naturally risk averse. Common sense tells us to spread our money out into a diversity of pots, hoping the ups and downs will balance out and we will enjoy a somewhat stable, if unspectacular, return on our investments. 

Needless to say, the investment environment, especially in the stock and bond markets, can be volatile. There have been historically high and low returns in the last few years. Investing limited only to public markets always risks the chance of devastation if the “bubble” precipitously bursts. This can be brought on unexpectedly by major events beyond our control or ability to predict, for instance: 

  • world tensions and conflicts;
  • environmental disasters;
  • widespread technological advances or miscues;
  • fluctuating interest rates;
  • galloping inflation; and
  • changing tastes.

As to holding cash, trading in commodities or speculating in domestic and foreign currencies, all have short and long term risks, the nuances of which are generally only understood by a select group of expert investors and insiders.

Everybody’s goal should be to build a more perfect portfolio designed for maximum rewards and minimum risk.

4. Real estate as an essential part of your investments

Meaningful real estate focused investing in your portfolio is an absolute must for any successful investor. We will tell you why! 

Real estate investing for the most part fluctuates quite distinctly from other conventional asset groups, like stocks and bonds. It has unique features. For instance, real estate is tangible and is what lawyers call an “immovable”. 

By way of an aside and as a matter of general interest, in feudal times and for ages because few people could then read and write, the only recognized method of conveying land was by the gesture of actually handing over a piece of the dirt or the landscape to the new owner. This method of acquiring an interest in land, called “feoffment”, has long since been supplanted by conveyances founded in statutes — for example written and registered deeds and mortgages. Despite the obsolescence of the feoffment ritual, the notion of intrinsic permanent value of real estate remains embedded in our collective psyche. And so, a centuries old real estate investment strategy continues and thrives in today’s modern times. 

Back to the discussion.

Unlike stocks and bonds real estate trades privately based on local factors such as:

  • location;
  • supply;
  • demand; and 
  • investment lifespan. 

It is often scarce, particularly in growing areas, which translates to a history of appreciating value. In your portfolio, real estate investing is a channel to investments backed by real hard assets providing a regular income stream and long term growth coupled with the benefits of diversification. Other benefits to note include:

  • the ability to take advantage of leverage;
  • tax deductions; 
  • a chance to create added value; and 
  • an increased voice in the management of the asset. 

There is no reason not to be able to enjoy superior performance and diversity at the same time. 

Real estate investment for women, particularly, can practically be very important for their portfolios.  Women simply live longer than men!  The need to maintain and grow the value of a retirement portfolio is a pragmatic concern. What better way than to include real estate investing as part of their overall investment strategy. Good real estate investing can only enhance the prospect of enjoying the benefits of things like reasonable leverage (typically as much as 4 or 5 times) and the miracle of compound interest over an extended period of time. 

Accordingly, take advantage of having real estate backed investing as a meaningful part of your portfolio since it is self evident as a way to enjoy reasonable returns and protect against the vagaries of other classes of investment and vice versa.

5. Invest like a big player — the 20% rule

Most of us never get a chance to participate directly in a major real estate project — usually grabbed up by big players, like private equity firms, banks, insurance companies, pension funds, and government institutions. We are mostly left to public mutual funds, real estate investment trusts (“REITs”), exchange traded funds (“ETFs”) and the like. 

In fact these “best” investors always employ a direct real estate investing strategy. Typical allocations range from 12% to 16% of their entire investment package.

Benchmark returns with and without real estate make a compelling argument for the inclusion of real estate investing. 

 

Sources:

  • https://www.td.com/ca/en/personal-banking/personal-investing/products/gic/gic-rates-canada/
  • https://www.rbcdirectinvesting.com/pricing/gic-bond-rates.html
  • https://www.morningstar.ca/ca/report/fund/performance.aspx?t=0P0000Q34Y

In that regard, consider the experience of and the lessons to be learned from the Yale University Endowment, which is one of the best performing investment portfolios in North America, having a current value in the range of $30 billion. The fund is known for its “20% rule” which recommends at least 20% be invested directly in private markets, like real estate.

Sources:  

  • https://www.investopedia.com
  • https://www.origininvestments.com
  • https://www.investments.yale.edu/about-the-yio

This invariably translates into significantly higher returns over time for a real estate investor over one who employs a more traditional allocation based in public markets. 

One can only conclude that it makes sense to piggyback onto a tried and true paradigm of real estate investing established by the major players. 

6. How to pursue real estate investing as an individual

How can a smart, modern investor get in on the real estate investing action, especially since going on your own may require prohibitive amounts of capital?

Besides buying a home or taking on a private mortgage, there are any number of vehicles designed on a broad platform to facilitate an individual’s ability to put money into real estate — whether it’s equity or debt. You can in fact add real estate to your portfolio without actually buying property.

In Canada, we have mortgage investment corporations (commonly called “MICs”), mortgage trusts, limited partnerships, real estate mutual funds and the like. Generally these are all set up so that their investors share in any number of projects. This means returns are not necessarily fixed and depend on the performance of a pool of assets. 

Yet, once you decide to add real estate investing to your portfolio, putting your plan into action brings with it a number of challenges — Where are the opportunities? Do they make sense? Is the asset mix right or over-concentrated? Is a direct investment better than a pooled one? etc., etc., etc.

This is precisely when you need a trusted party to step in and guide you in the right direction for real estate investing.

7. Summary

 Meaningful real estate investing is an essential for a well-rounded and successful investment package. 

Here’s a recap of why:

  • Real estate is a hard permanent asset that can be easily securitized;
  • Real estate backed investing will balance out the vagaries and unpredictable fluctuations in public securities markets, both domestic and international;
  • Real estate can provide a regular fixed income stream over a set time frame; and
  • Real estate investing will pay off in the long term and at the same time maintain a high degree of safety.

8. The last word — make Fundscraper your ally

You may hear from a small minority of commentators that there are reasons to avoid direct real estate investing as part of your portfolio. 

These basically distill down to the proposition that most people do not have the requisite knowledge or expertise. Individual challenges include assessing such things as:

  • financial implications;
  • neighborhood dynamics;
  • data analysis; 
  • types of opportunities;
  • property management skills;
  • leverage;
  • cash sufficiency; and
  • physical inspections.

While many of these are valid reasons for an individual to be cautious, Fundscraper Capital provides the ultimate solution for your real estate investing. We will professionally handle the search, due diligence, and financial analysis to aid you to assess and make decisions with all the facts at your fingertips and the completion of your investment in compliance with all laws and regulations. 



Start Investing in Real Estate Backed Investments Today

Explore the investments available on Fundscraper.

GET YOUR FREE DIGITAL COPY

The Modern Investor's Playbook
to Super Successful Investing

Become a master of real estate investing! This playbook has inside industry knowledge that you can use to help generate passive income! Discover tactics used by the savviest investors, how to diversify, maximize your returns and avoid mistakes. It’s everything you need to know to invest like a pro.

Start investing with Fundscraper today.