Financial experts, as well as America’s wealthiest, advocate for investing heavily in real estate.
For example, investment aficionado and ER physician Jim Dahle of The White Coat Investor shared that he increased his real estate holdings to comprise 20% of his investment portfolio.
The Financial Samurai, a renowned personal finance expert and alternative investments veteran, recommended allocating 25% – 30% to real estate in his net worth mix recommendation shown below.
With a rare combination of strategic benefits including cash flow, long-term appreciation, and favorable tax treatment, real estate is an undeniably unique investment opportunity.
But, what is the best way to gain exposure to real estate, especially if one lacks the time necessary to own and operate properties directly? Let’s explore just one way to break into real estate: private equity real estate funds.
What is a private equity real estate fund?
A private equity real estate fund allows investors to combine their capital together to invest across a diversified portfolio of professionally selected and managed real estate properties.
Why invest in a private equity real estate fund?
Simply put, property management and landlord-ing is just not for everyone, but real estate investors want very strong returns on their capital. For those who are not ready for a real estate side hustle, yet want a better return than traditional real estate investment trusts (REITs) can offer, private equity real estate funds are alternatives that offer many benefits:
01 Gain a truly passive income stream.
After selecting a fund subsequent to an extensive research process on private equity firms and their deals, you can sit back and let your money work for you. In one decision, you can hire a team of experts to grow your wealth and simultaneously eliminate handling early-morning maintenance calls and chasing late rental payments.
02 Make money now…and later.
Many private equity real estate funds provide a consistent cash flow through dividends. Additionally, real estate commonly appreciates over time thus offering incremental gains when the fund term is completed and properties are sold.
03 Profit from tax advantages.
Private equity real estate funds offer tax benefits to investors due to property depreciation, which shelters large portions of cash flow from current taxation. This is a major perk of real estate investing.
04 Generate superior returns through focused strategies.
While a REIT is the easiest way to access a diversified pool of real estate, these investment vehicles are broadly diversified and, often, are not focused on a particular strategy designed to produce superior returns. A private fund allows an investor to cater to a particular risk profile and return objective.
05 Protect your capital through diversification.
Though you may have the resources to go all-in on your own investment property, private equity real estate funds provide the ability to diversify across different properties, asset types, and locations. This diversification is an important aspect of managing risk.
06 Reap financial gain under the experts’ care.
Researching, analyzing, underwriting, acquiring, developing, managing, and leasing property…executing each of these tasks on a large scale and with excellence requires an experienced and dedicated team. By investing with a private equity real estate firm (that you’ve interviewed and vetted), you can rest in knowing they’re skillfully handling the details.
Who are private equity real estate funds best for?
Most private equity real estate funds are available only to accredited investors. For investors looking to gain exposure to real estate but are not accredited, there are multiple options to break into this asset class.
If Private Equity Real Estate investing sounds like a good fit for your financial goals, we’d invite you to explore Birgo Capital’s current investment opportunities. Birgo Capital acquires and operates stabilized but underutilized properties in the Pittsburgh and surrounding markets. With a focus on multifamily workforce housing, service-oriented retail, and diversified office buildings, the portfolio is an income-generating investment that yields both dividends and future appreciation for its investors.
For more information about investing with Birgo Capital, please contact us — we’d love to get to know you.
Stay tuned into Birgo Capital’s blog as we will be sharing more on Private Equity Real Estate Fund Investing including:
- Is Workforce Housing Still A Safe Investment?
- Is Now The Time To Invest In Real Estate?
- Four Strategies To A Stabilized Real Estate Portfolio