Why you should consider both income and growth assets.
In our last article we discussed the basics of what Private Placements are and how they differ from the investment offerings typically found on Wall Street. If you did not receive or cannot find that article and would like to review it, please reach out to us and we can send you another copy.
As a result of the JOBS Act, which was signed into law in April of 2012, private investments were not as marketable or available to the general public thus making them primarily available for the well-connected and high-income earners. All of that has since changed and private placements now offer a wide variety of debt, equity and hybrid options. Many of these include cash flow equity appreciation, and tax advantages!
More individuals are now seeking these alternative investment opportunities that typically yield above-market returns to diversify from the traditional Wall Street based public offerings.
All financial advisors encourage their clients to invest in a diversified portfolio comprised primarily of stocks, bonds, mutual funds, REIT’s and other paper assets. Investing in private placements drastically increases the diversity in one’s portfolio has the potential to offer a variety of both short and long term returns that can lower volatility. More importantly, these are “Main Street” products consisting of hard assets such as real estate. One reason we love real estate is that it also offers tax saving opportunities and the ability to purchase assets at a fraction of their actual value using leverage. Real estate has also historically had a high risk-adjusted rate of return relative to stocks and bonds. Below is a chart comparing commercial real estate to other publicly traded products:
Investing passively in private placements allows an investor to leverage the knowledge and expertise of a sponsor whose company works with a team of experts including attorneys, bankers, accountants, property managers, and contractors to name a few. The sponsor is responsible for aggregating the capital from investors in the form of shares to acquire properties and manage the daily operations of these assets. In return for these services, the sponsor shares a portion of the profits with the investors
creating a stronger sense of synergy within the group. Communication is key which includes working with the above-mentioned team to provide scheduled reports and distributions to the shareholders including necessary tax preparation materials.
In this season of giving thanks, we are grateful to be able to provide these opportunities for our investors and thankful to have closed on another property yesterday that will provide safe and stable housing for children and adolescents with special needs in the Spokane Valley.
If you would like to learn how you can be a part of this socially conscious effort and enhance the ability to achieve the financial success you and your family deserve, please reach out to us for more details.
We wish you and your family hope, joy, peace, good health, this Thanksgiving!
Investing for impact,
Global Summit Management