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 solid real estate 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
Act and invest as if you are a big important player in the real estate game!
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.
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.
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 many 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 any 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.
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;
Direct real estate 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
Direct 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:
types of opportunities;
property management skills;
cash sufficiency; and
While many of these are valid reasons for an individual to be cautious, Fundscraper’s education centre aims to arm you with the right resources for your real estate investing. Feel free to visit our site and learning centre today!