Strategic Commercial Real Estate.
I believe investing should be an active process whereby you are constantly evaluating and re-evaluating your assumptions and conclusions as new information comes to light.
I prefer to invest in things that make money.
Specifically in response to the question, I would invest in real estate, but not just any real estate. Invest in real estate very strategically.
I would take a modest approach and park a reasonable percentage in a private commercial real estate fund that yields a solid 20% IRR. We do this for our clients by helping them invest in a fund that strategically acquires under managed and undervalued assets in hotels, apartments, self storage, and offices each generating a healthy and consistent amount of cash flow.
This is exactly what I’ve invested in personally and have been very happy with the results. I can rest easy at night knowing that I don’t have to worry about the volatility of the markets and whether a significant portion of my principal has been wiped away because of some transient drawdown, or worse.
Best of all, this is a passive way to invest and still be tied to something making money.
Contrary to popular belief you don’t have to be risky to achieve high returns. People with a net worth of 100M+ are extremely risk averse, yet they manage to make 20%+ per year time and again. How do they do that?
They have access to deals that allow them to put their capital to work with little to no risk, many times in real estate.
Real estate is a tangible asset that can produce cash flow when managed carefully. It can also be leveraged conservatively to amplify those gains.
All of the properties I’ve invested in through those funds give me tax advantages, asset class diversification, phenomenal returns, and strategic management. In addition I can meet directly with the presidents and CEO of the Inc 500 company that manages it all.
Returns like this are simply not typical of those with a sub 100M net worth but if you look at the ultra rich and the big institutions, these are exactly the kinds of things some of them are doing. They are risk averse. They do not put their money at risk where it can be affected by massive drawdown. Instead, they take very calculated measured approach to investing while hedging using solid value based investing. This way they are able to achieve 20%+ year after year.
We have been able to identify the market inefficiencies and capitalize on them to a great extent. This has allowed us to outperform the vast majority of opportunities out there at a much lower risk profile. We are able to offer consistent and repeatable results year after year with investments backed by hard tangible assets.