5 Things that Family Offices are Looking for, and How We Work with Them
Because of the global outbreak of the covid-19 pandemic over the last few months, businesses all over the world have almost come to “idle status”. Practically, it is said that it will be a bit longer before the world gets up from the economic turmoil because of the pandemic.
The coming months will surely become dynamic yet volatile. While it is a bit premature to predict the economic fallout from the wrath, economies of developing countries will surely face huge challenges before they get back on their feet as compared to first-world countries.
Verily, the ongoing global recession over the last ten months had ignited a slowdown in the real estate sector. The lockdown has caused a short term wound in several investment industries like stocks, real estate and the like. Real Estate investment has been in stagnant mode because of social distancing and liquidity issues. But still, family offices are slowly emerging as the big players in worldwide real estate investment markets. Family offices are prevalent for the purpose of managing and investing funds to sustain long-term prosperity and wealth. Also, please be reminded that the wealth controlled worldwide is around ten trillion dollars.
Based on studies, it was estimated that there are more than five thousand single-family offices of which the majority are in the North America and European Region. Further. There are a lot of multi-family offices which service up to a few hundred wealthy families. It has been predicted before that one should wisely invest the majority of one’s assets in property. At this point, in times of creative monetary dilution, family offices are starting to remember this principle.
But, in the last few months, the stock market has drifted by almost forty (40) % of its value. Losses in portfolios have been prevalent in several investors with investor erosion seen in even the high ranking affluent and rich business families. For a family office, it will be a bit challenging to function during a lockdown. However, family offices seem to survive because of love for the real estate investment industries and investment providers who are willing to help in this type of looming industry. But, given the comparatively low correlations with the stock market industry, real estate is specifically suitable for a diversification of family offices’ equities, bonds and other alternatives.
We have listed things that family offices are looking for in real estate investment providers:
- Investment that will work for single-family offices. It is a known fact that family offices are specifically mindful of value preservation. Hence, real estate exposure should primarily represent a key part of a family offices’ investment portfolio allocation. One key is transparency, should be strictly taken into account. Remember the 2008 financial turmoil, a lot of funds are tailored as so-called “blind pools”. We provide real estate investors with a manager with capital without any idea on how investments were made along broadly recognized investment principles and parameters.
Direct influence and transparent structures are emphasized on wealthy private real estate investors and family offices. The secret in direct investments in the real estate industry is that investors like you can decide and control the key parameters. You take your destiny in your own hands, with our help. Direct investments will only attain desired success if family office is coupled with specialists that have the capability to steer the wheel. We possess relevant experience and access to appealing investment opportunities.
- Aid in capital preservation, tax efficiency, growth and income. During low returns season, in almost all major asset classes and despite cap rates being close to their lowest levels in a lot of key real estate markets, real estate investment continues to gain significant and appealing net yield spreads. We help family offices not only to strive in acquiring lucrative return on investments, but to conservatively preserve the wealth for tomorrow.
A lot of families, now wealthy, that we helped before often run significant family businesses. A main motivation is basically the fire within to safeguard and separate assets from the operational family business as well as create a lasting and professionally managed real-estate exposure. That is where we come to the picture. Real estate gives family offices freedom to come up with an array of investment strategies coupled with the risk potentials and corresponding returns. We help you in attaining a comparatively and stable cash flows. In reality, family offices have a tendency to pay close attention to lower risk profile core prospects. In the event that they obtain confidence in the said class, family offices may consider investments on the high risk to enhance returns. We can basically help you on this and walk you through the proper way of investing.
- Aid in 1031 exchange funds. Some investment providers like www.theapartmentqueen.com have a program complete with outlined processes’. From a long term family office approach, the fund term is a bit of a complex and very delicate aspect to be considered. We, as your guide will tell you that you should be aware as an investor of these kinds of risks in case market values and conditions enhance unfavourably around the pre-defined exit period. Another restricting consideration may be the limited flexibility of indirect investments in the event in alterations in investor preference or fund strategies.
The 1031 Exchange funds are regarded as one of the most tax efficient investment systems which is available to real estate investors for a long time now. But with the emergence of the Opportunity Funds under the Opportunity Zone program, the 1031 Exchange is being recognized as an efficient run for its money. This is because of the fact that Opportunity Funds not only showcase real estate investors the skill to reduce and defer their initial capital gains tax bill, they also give a way to eradicate any capital gains taxes garnered from their Opportunity Funds investments under certain scenarios. 1031 Exchange funds can save you a significant amount of investments ranging from 8-10 %.
- Aid you in coming up with appropriate investment strategies. We will help you in coming up with investment strategies. Indirect investing is one; it basically involves buying shares in a fund or a publicly listed company. One can also purchase shares in a direct real estate. It is imperative for executives of family offices to tailor their strategy and operations in the context of key features between indirect and direct real estate investing. This will surely post significant impacts on returns, control, diversification and risk. In any type of scenario and particularly given the recurring nature of real estate markets strategic planning, sound market analysis together with risk management should be on a family offices’ control in all phases of the market sequence.
Further, an “indirect investment” is regarded as a comparably uncomplicated and immediate recourse for rather “passive” family office investors. The benefit is that a higher diversification degree can be attained especially for investment in huge portfolio funds. It also supplies investor access to products in special types of properties, strategies in specialized locations. Another advantage is that fund managers are basically regulated and should do the work based on ethical standards. To add, in case of listed funds, family offices sometimes hit higher shares liquidity as well as subsequent exit is favourable.
Another way of smart investing is more commonly known as club deals. Some real estate investors or family offices invest together with the structure of joint venture or partnership. This has the edge that smaller checks have to be released as compared to sole ownership. In that manner, the concentration risk can be lessened. In that regard, the cluster risk may be lessened if the co-investors can utilize the expertise of a credible lead specialist or investor like us. In order for this to work long term, it is imperative that investment styles and values are in coherence with all parties.
- Aid in placing a Roth conversion. A Roth IRA conversion showcases transferring retirement funds from the traditional 401k into Roth Account. It is a known fact that the 401k is tax-deferred with a Roth Account and is regarded as tax-exempt. The deferred income taxes must be paid on its due on the converted funds. Early withdrawal penalty is not prevalent. This can basically lower your taxes that you will pay to invest by self-directing your Roth Account. In other words, this principle refers to taking all or part of the balance of a traditional IRA and transitioning into a Roth account.
Truly indeed, that quality real estate might not only preserve your wealth but may surely bring you significant growth in your capital and experience long term income streams, which are essential factors to consider when talking about multi-generational ambitions and strategies. Private wealth sectors and family offices will endure to be a key player in worldwide real estate markets. This enhancement is specifically driven by the broadening family office wealth base together with increasing allocation to real estate as part and parcel of their substitute assets.
WE ARE LOOKING FOR MORE INVESTORS LIKE YOU PLEASE HIT THE forward button ABOVE to quickly send to a friend who can benefit from our strategic, forward-thinking strategies and investments.
Our ideal investor is usually one of these individuals:
Ultimate passive investors-
1031 exchange over 500k-
High net worth individuals
Individual who Worked for a major company over 10 years
Real estate brokers/agents
Individuals with pension funds
Women-owned family offices or family offices/funds who support the social initiative to teach financial literacy to women
Angel investors supporting women
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