Should You Add Real Estate Private Equity to Your Portfolio?
/When it comes to investing, there are a variety of options to choose from. Each has its own unique set of benefits and drawbacks, so it can be challenging to decide which is the best fit for your individual needs. One investment option that is often overlooked is real estate private equity. This type of investment can be a great way to secure your financial future and build long-term wealth. In this article, we will explore the benefits of real estate private equity and why you may wish to consider it for your investment portfolio.
What is real estate private equity?
Real estate private equity is a type of investment that involves buying stakes in private real estate companies. These companies are typically not traded on public exchanges, so they offer investors the opportunity to get in on the ground floor of some of the most promising real estate projects. Private equity firms typically raise money from various sources, including institutions, high-net-worth individuals, and family offices. They then use this money to invest in a variety of real estate projects.
Should you add real estate private equity to your portfolio?
Below are some considerations to review before adding real estate private equity to your portfolio.
1) Real Estate Is A Stable And Predictable Investment
Real estate is one of the most stable and predictable investments out there. In addition, it has a low correlation with other asset classes, which means that it can help to diversify your portfolio and reduce risk.
2) Real Estate Private Equity Offers The Potential For High Returns
Private equity firms typically aim for returns of 20-30% per year. This is significantly higher than the returns you would get from investing in public real estate companies or mutual funds.
3) You Can Get In On The Ground Floor Of Some Of The Most Promising Real Estate Projects
Private equity firms have access to a wide variety of real estate projects, including ones that are not yet available to the general public. This gives you the opportunity to get in on the ground floor of some of the most promising investments.
4) Private Equity Firms Have A Lot Of Experience
Private equity firms typically have a lot of experience in the real estate market. This means they are better equipped to identify promising investments and navigate the complexities of the real estate market.
5) You Can Access Lower Interest Rates And Better Financing Terms
Private equity firms have access to lower interest rates and better financing terms than individual investors do. This allows you to buy properties at a lower cost and increase your return on investment.
6) It Is A Liquid Investment
Real estate private equity is a relatively liquid investment. This means that you can sell your stakes in a private equity firm when you need to, without having to wait for the firm to go public or be sold.
7) You Can Invest In A Variety Of Real Estate Projects
Private equity firms typically invest in a wide variety of real estate projects, including office buildings, apartments, shopping malls, and hotels. This gives you the opportunity to diversify your investments and reduce risk.
8) Real Estate Private Equity Is A Long-Term Investment
Private equity firms typically have a long-term investment horizon. This means that they are more likely to hold on to their investments for the long term, which can provide stability for your portfolio.
9) You Can Access A Variety Of Tax Benefits.
Investing in private real estate equity can provide you with many tax benefits. These include the ability to deduct your investment losses from your taxes, the ability to defer taxes on your profits, and the ability to take advantage of depreciation deductions.
Blackstone - a real estate private equity firm
One company that has had success investing in real estate private equity is Blackstone. Blackstone is a private equity firm that was founded in 1985. Over the years, it has invested billions of dollars in real estate projects worldwide. In 2017, it generated a return on investment of 22% on its real estate investments. This is significantly higher than the returns you would get from investing in public real estate companies or mutual funds.
In Conclusion
Real estate private equity is a great investment opportunity. If you are interested in learning more about this type of investment, read a thorough guide to real estate private equity. It offers the potential for high returns, access to lower interest rates and better financing terms, and a variety of tax benefits. So, if you're looking for a stable and predictable investment that has a low correlation with other asset classes, real estate private equity may be right for you.
*Note these investments require an investment typically over $100,000 and are usually only available to accredited investors.
Disclaimer: the content presented in this article is for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.
