In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year. The term accredited investor is defined in Rule 501 of Regulation D of the U.S. Securities and Exchange Commission (SEC).
Invest in Private Real Estate and let your portfolio see the difference.
For generations direct real estate investing has provided immense wealth, but only for the select few. Historically, investors needed specific knowledge, the right connections and most importantly access to large amounts of capital. Hedge funds, professional investors, and the ultra wealthy have taken advantage of these opportunities for years, but now any Accredited Investor can participate in this once out of reach opportunity.
Why Private Real Estate over Public Real Estate?
Like stocks, bonds and mutual funds, public real estate investment trusts (REITS) can be traded daily and thus have high volatility as they are associated with the public markets. On the other hand, private real estate has shown historically low correlation to public markets thus providing better diversification. In today’s age where equity markets have increased in volatility and uncertainty, private real estate investing can provide opportunity for above average returns and cash flow without the ups and downs of a public security.
So why do the most Wealthy Investors choose Real Estate?
- Diversification from Stock and Bond Markets – As an asset class commercial real estate behaves quite differently than stocks, bonds or mutual funds. Direct investment in commercial real estate has a historically low correlation with the stock or bond markets. Unlike the stock market, short term volatility or headline risk is not a significant factor in commercial real estate.
- Cash Flow – Direct investment in commercial real estate can provide cash flow at or above traditional income markets. Plus, most commercial real estate deals are structured with a sizable return upon exit or sale of the property.
- Less Volatility – Many commercial real estate leases are multi year leases with some in excess of 10 years. Most office leases also include rent bumps that will increase cash flow during the lease.
- Asset Based Investment – Real estate is a hard asset that has value both in the building and in the land. These assets are used to increase the value of the land through cash flow.
- Tax Advantages – A direct investment in commercial real estate is done through investing in an LLC that holds the real estate. Investors buy units in the LLC in the form of equity or debt. The LLC then passes through deductions such as depreciation, interest expense and other items that defer taxes on distributions. Many or our investors receive a passive loss on their K1’s until we exit or sell a property. At the time of sale the profit is considered a long term capital gain if held longer than a year which is typical.
- Inflation Hedge – The factors that create inflation in our economy are the same factors that drive up rents and real estate prices.
Are you ready to add multi million dollar projects to your portfolio?