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Looking for a Safe Haven in 2023? Real Estate Investment Is Still a Good Idea If You Do the Homework And Learn from the Trends and Leaders In the Space

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By Jeffrey Grant

The financial news headlines are enough to cloud the mindset of any real estate investor wondering if the space is still a viable one — ongoing bank failures and interest rate hikes, recession fears, lingering supply chain issues and a stock market that reflects both unease and uncertainty. What should you do?

If you’re smart during this period, look for opportunities to grow your portfolio rather than cashing it out or just sitting on the sidelines. So-called safe havens might be right under your nose – if you do your homework first.

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In 2023, well-informed individual investors are looking to diversify their portfolios even during this time of turbulence and trepidation. While some are buckling down or momentarily bowing out, savvier investors are still pursuing a diverse mix of investments to position themselves to do more than just weather the storm. One ally in the battle can be private real estate investment offerings or alternative investment syndicates (alts) for accredited investors working with registered investment advisors (RIAs) or family offices. Private multifamily housing investments in particular are worth a closer look.

Alts, RIA, REIT and Multifamily Home Projects

Why alts, RIAs and multifamily? Because according to new research trending from AltExchange, nine in 10 advisors intend to increase alts allocations over the next two years, and because other financial advisors might not have access to for their clients or may get wrong. The nice thing about these investments is that they are non-correlated to the stock market. And they don’t come with the extra layers of management and other fees frequently found in traditional REIT (real estate investment trusts) or funds.

In many such REIT scenarios, they can be filled with basket-type portfolios – you have to invest in office, shopping centers and other property mixes that you might not be interested in, investment-wise. But select firms offering direct real estate exposure can offer a sound alternative to a REIT by offering investors the ability to decide which single projects to fund, thereby lessening their exposure to broader and more volatile product types. This is one advantage to working with an RIA connected to a private firm like the one I represent — Roers Companies — where we can offer direct investment in specific multifamily properties to accredited investors through the advisors they know and trust.

Multifamily housing demand remains high, and the housing crisis in major cities is widespread. Single-family homes are becoming increasingly too expensive to buy or build for the current and next generation of housing seekers. Single-family home construction is generally slowing, and interest rates are pricing out many potential homebuyers, which creates sustained demand for rental housing. So multifamily investing can be an ideal hedge in the current environment — again if you do your due diligence.

Check These Boxes: Scoping, Transparency, Frequent Reporting and Fast Lease-Up Rates

Eleven years ago, Roers Companies’ co-owners (and brothers) Kent and Brian Roers began developing multifamily properties in the Midwest. Now, the business they founded includes 10,000 apartment units and $2 billion in development across 14 states — proof, perhaps, that its one-stop business model is thriving. The leaders and their team have weathered more than a few storms, and they readily attribute tenacity during downturns and diversification as key to their sustained growth and success. But don’t just take my word for it.

According to Kurt Durrwachter, founder and CEO of the 13-year-old Ledge Wealth Management in Sartell, Minn., with nearly $400 million under management, Roers Companies has successfully differentiated itself. He says, “Their one-stop business model with development, construction and property management is very attractive. And their regular reporting of construction and other information offers the kind of detail we rarely see in this business. I think they’re pretty unique, and they have a highly successful leadership team that has done an impressive job of growing the company in just 11 years.”

Roers Companies reached that milestone largely on the strength of “friends-and-family investors” based primarily in Minnesota. That strategy helped them become a top-three Twin Cities developer, Minnesota Real Estate Awards’ 2023 Developer of the Year, and even rank among the Top 25 Developers of multifamily housing in the country, according to the National Multifamily Housing Council.

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Now their new initiative, working with RIAs and family offices, will allow Roers Companies to expand into additional markets where multifamily housing is needed and market fundamentals are solid. This next chapter in their story is also helpful in understanding the current and future opportunities that exist for anyone considering what the multifamily niche has to offer — even in a downturn.

One longtime Roers Companies investor notes how the company has done a superior job of checking all the key boxes investors look for.

“They have been very successful in just 10-11years’ time,” observes James Lee, “because they’re doing projects and making site selections in cities with projected job growth and housing shortages, especially in multifamily housing — and their fast lease-up rates are twice as quick as the industry average!

“The critical research, scoping and planning Roers Cos., does — plus the construction and leasing updates and quarterly reporting to their investors that offer true transparency — are often missing with larger investment firms. The returns,” he adds, “can be significant.”

Jeffrey Grant, Senior Managing Director, Capital Markets, leads the RIA initiative for Roers Companies, whose development pipeline is likely to include new ground-breaks in North Carolina, South Carolina and Tennessee in 2023.

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Is REIT a good option for earning passive income?

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Image by Tumisu from Pixabay

By Phil Bradford

The year 2020 has made us realize that you need an extra income avenue to sustain yourself. Apart from your regular income, if you can earn passively, then you will be one step ahead to make yourself financially stable.

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Image by Gerd Altmann from Pixabay

When you are thinking about passive earning, REIT (Real Estate Investment Trust) is a good way to earn passive income and you can trust it. Real Estate Investment Trust or REIT manages commercial real estate properties. The REITs are publicly or privately traded companies and with the money taken from the investors as an investment, they run the commercial real estate properties. The benefit of investing in REIT is they are designated to pay 90% of their taxable income to the investors and the 90% return signifies the dividend is higher than other stock investments.

Now, you can take a look that REITs invest in what kind of property

REITs are attractive for the investors because the investors don’t have to take any burden like buying any property directly. REITs are dividend-generating passive income avenues where investors do not have any tension of buying any property.

Have a look at REITs usually hold what kind of properties:

  • Office buildings.
  • Retail buildings such as shopping malls.
  • Hotels and resorts.
  • Healthcare facilities.
  • Apartment complexes.
  • Warehouses.
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Image by Jason Goh from Pixabay

You can depend on REITs to earn passive income if it has a good management team and if there are some good properties in its hold. Then you can relax and watch the growth of your investment.

The 11 points that describe REITs is an ideal passive earning avenue

The REIT works in the same way as the stock market or the mutual fund. You will receive dividends from the company and make a profit from REIT stocks when you will sell them.
  1. The high dividend returns are the special feature of the REITs. No other investment can provide you such a high return.
  2. The upfront fee of REIT is not very much.
  3. For a newbie investor, REIT is the easiest way of starting an investment. You have to only use a brokerage account to buy REIT stocks.
  4. The investment range of REIT is comparatively lower than other investments if you make a comparison. The investment range of REIT runs from $100 to it can stretch upto several thousand dollars. REITs are an easy way to build your wealth.
  5. REITs are usually liquid investments. You will be able to buy and sell the REITs in the open market.
  6. The dividends you will earn from REIT can be increased from time to time when the asset value of REIT’s properties will increase gradually.
  7. Investing in REITs is a good option to diversify your portfolio and it can help you to reduce the volatility of your portfolio.
  8. REITs are the best alternative for those people especially the retired persons and the newbie investors who do not have adequate capital to buy and manage their property.
  9. The real estate market is usually dominated by larger corporations but REIT is giving the chance to small investors to invest in commercial real estate. Generally, REIT is the collective trust among the multiple investors that non-accredited investors can invest with minimal dollars.
  10. This long-term investment in REIT is profitable for its liquidity.
  11. Indeed, the historical performance never guarantees the future performance of REIT. Though REIT data reveals from 1977, it has earned 12% on average annually.
One important point to remember is that your income from REIT will never be taxed by the IRS as passive income. Rather the earning from REIT is considered as portfolio income and they will be taxed based on the capital gain tax rate.

Can you depend on REIT amid this uncertain time?

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Image by anncapictures from Pixabay

In this devastating 2020, where everything is uncertain, people are almost dependent on stimulus packages, the question will come to mind that is it a good time actually to invest in REITs? Well, financial experts are saying that if you have money in hand now then the better option for you is to invest in REITs than the stock market. With REITs, your investment will grow in less-volatile conditions and in a stable and balanced way. It is only REIT investment that is providing you an opportunity like you can deduct up to $3000 from your taxable income if you suffer any loss. But REIT experts are saying that you can avoid three types of REIT investment now and they are the hotel, hospitality, and retail. The hotel and hospitality business is in its bottom level currently due to tour and travel is at its lowest strata. The same thing happened with the retail stores. Due to lockdown, nearly all the retail stores are closed so retail REITs are not much profitable now. So, if you keep these points in mind even in this uncertain time, you can depend on REITs to earn passive income.

Can you depend on REITs during an emergency?

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Image by Peggy und Marco Lachmann-Anke from Pixabay

Average Americans tend to use the ‘quick-money-way’ for fulfilling any emergency. For Americans, quick-money means either high-interest credit card loan or a payday loan. But both are not good for your financial health. The minimum interest rate of a payday loan is 391%. For a small loan amount, you have to pay off a ballooning interest rate. Rather than this option, during any emergency, if you sell your REIT stock, you can get a lump sum amount most safely. However, if you are already entrapped in payday loans then you can choose the consolidate payday loans option for now. Eventually, REIT is more dependable to you as an option to get out of any financial emergency.

Final words,

After reading the article, you may have understood that to earn passive income and for your emergency-money-requirement, there is no substitute for REITs. To invest in REITs means you will gain some tax advantages. Due to the reason of avoiding corporate tax, REITs distribute 90% of their income to the shareholders. The net result of this is higher earnings for REITs investors. In brief, if you want to earn a passive income without taking much hassle or risk, you can depend on REITs. That is why REITs are the dependable income avenue for you even for your after-retirement-phase or if you are a rookie investor.
Phil Bradford

Phil Bradford

Phil Bradford is a financial content writer and an enthusiast. He has expert knowledge about personal finance issues and he is a regular contributor of Debt Consolidation Care. His passion for helping people who are stuck in financial problems has earned him recognition and honor in the industry. Besides writing, he loves to travel and read books.