RE Investing 101

Nov 19

Written By Pinnacle Real Estate Investment & Development

In sports, successful teams that “stick to the basics “and do not deviate from their core values, find themselves winning more games and separating themselves from others. The same is true for Real Estate Investing, by putting together a portfolio of diverse assets, avoid concentrated risk and follow the market momentum upward will give you the basic tools and winning formula for long term wealth.

Real Estate has offered a positive return for 20 of the past 22 years (except 2008 & 2009). While returns vary and past performance is no guarantee of future results, investment strategy has always been founded on these basic principles. How much you make on your real estate investment comes down to a balance between risk and potential returns. A good rule of thumb is that the possibility of above-average returns is only available to investors willing to assume above-average risk. So if an investor wants to limit risk in their portfolio then they should not expect oversized returns. Understanding the basic risk and returns ratio will help you allocate your capital with the right distribution.

Back in 1952, an economist Harry Markowitz introduced the “Modern Portfolio Theory”. This is still very popular today with savvy investors and helps find the ideal balance of risk and diversification for corresponding investment objectives. It offers the investors the mathematical framework to select the right mix of assets. Following the framework of this theory, even in today’s climate has guided thousands of real estate investors meet satisfying returns.

Private commercial real estate has been a sound and consistently choice for the savvy investor. These private funds tend to be better than traditional investments and may offer a protection from market volatility and less prone to be impacted by news and economic policies. Also known as “Alternative Investments” generally because they are an alternative to just stocks and bonds; Some advantages of Private RE Investment is it is less likely to be influenced by the negative impacts of inflation because it is tied to long term leases and rental rates that increase each year. Also, capital depreciation and tax benefits are additional benefits of these private funds which is not offered in traditional investments.

In summary, these private commercial real estate funds give you the opportunity to partner with other investors allowing you to spend far less than you would buying a commercial property alone. Because there is no one size fits all answer for real estate and commercial real estate investing, the best way to get started is to educate yourself on the various pathways of options that interest you in order to minimize the risk and maximize the profit. By sticking to the basics and using some of the fundamental principles that savvy investors have been using for decades, it will give you the tools to build wealth for many years to come.

Your opportunity to invest...