How to Invest in Real Estate for Busy Professionals

[vc_row][vc_column][vc_column_text]Think you’re too busy to enjoy all the benefits that come with Real Estate Investing?

It’s no secret that the wealthy and institutional investors are heavily invested in commercial real estate.

As an alternative investment, real estate has ideal characteristics as an inflation hedge: yield, leverage, and appreciation. It does well in upwardly trending markets, continues to pay even as you wait out market corrections and typically declines less than stocks in downturns.

For those skeptical about commercial real estate’s appeal, one only need look to the investing habits of ultra-high-net-worth individuals (UHNWIs) – defined as those with $10M of investable assets. A recent survey of Tiger-21, a peer-to-peer network of one such group of UHNWIs, revealed that its members consistently invest 30% of their total investable assets in commercial real estate. Israelson, David (May 16, 2018), “Why the Wealthy are Heavily Focused on Real Estate,” retrieved from https://www.theglobeandmail.com.[/vc_column_text][gem_quote style=”4″ no_paddings=”1″]Interestingly; although heavily invested in commercial real estate, most UHNWIs eschewed the direct investment route – preferring instead to defer to the expertise of others.[/gem_quote][vc_column_text]Given the merits of commercial real estate investing, where do the uninitiated begin, especially those who are time-constrained? Fortunately, the real estate investable universe is vast, providing opportunities to participate in numerous ways, at multiple price levels, and in various geographic locations. We’ve narrowed down the most common ways an investor with little time and without bottomless pockets can get started with commercial real estate investing and the pros and cons of each.
 

Local Partnerships

Pros: By partnering with a local investor on small local deals, you can invest in a known commodity in your backyard. Yields can be attractive.

Cons: Diversification is limited since you’re bound to a specific market and asset class. Scalability is also limited since the local investor typically flies solo and doesn’t have the personnel or infrastructure in place for large scale operations.
 

Secured Private Lending

Pros: Typically, good fixed returns.

Cons: Secured private lending becomes costly when a deal goes south since foreclosing on the property is both time consuming and expensive with significant legal costs. Plus, if you lend in borrower-friendly states like New York, foreclosure can take years, which leaves you with a non-performing investment longer than you intended.

Turnkey Investment

A turnkey investment involves collaborating with an investment group where you provided the financing on a property (i.e., taking out a mortgage in your name) with the group handling the rest – from acquisition, to management and disposition. You split profits from income and appreciation with the turnkey company.

Pros: No expertise required, no rehab, no tenant management, no need to deal with disposition.

Cons: The vast majority of turnkey arrangements yield low returns after taking into account the long list of fees and expenses charged by the turnkey companies including acquisition fees, due diligence fees, management fees, disposition fees, etc. When factoring in inflation, most turnkey arrangements result in negative net returns. Moreover, you’re dependent on the turnkey company’s information and property management company for the accounting of expenses. These sound attractive but did you ever ask yourself if these are such great deals, why doesn’t the company keep them or obtain financing themselves? That’s because the vast majority are making their money from the fees and expenses.
 

REITS

Pros: Most REITs are Public REITS, which have a low cost of entry, allowing participation for as little as the cost of one share of the REIT’s stock. REITs allow participation in the commercial real estate class without the typical entry costs. Also, REITs are required to distribute 90% of their taxable income to investors.

Cons: Public REITs are exposed to Wall Street volatility, and mismanaged REITs may not distribute any income.
 

Real Estate Stock, ETFs, and Mutual Funds

Pros: Low cost of entry.

Cons: Like all public equities, subject to Wall Street volatility and highly correlated with the broader economy.
 

Private Companies like Four Peaks

Pros: Can participate in commercial asset class without expertise or market familiarity at a fraction of the cost of direct investments without sacrificing much yield. Transparency allows for access to fund managers to align personal investment objectives and philosophy with those of management and the company. Investment in multiple assets or funds enables diversification across geographic markets and asset levels. Diversity of compensation options including hybrid structures involving equity with preferred returns and debt with profit sharing.

Cons: No control over management.

Of all the ways to invest in commercial real estate, UHNWIs by far prefer investing through private companies – avoiding the market volatility associated with public REITs and real estate-related stocks, mutual funds, and ETFs. Due to the transparency not seen in the public sector, wealthy investors are able to interview managers and perform necessary due diligence to make informed investment decisions, aligning their own investment goals with those of the fund’s.

Happy to defer to the expertise of others, UHNWIs turn over their capital and sit back and watch their money grow. And thanks to recent legislative changes like the JOBS Act, commercial real estate investment opportunities in private companies like Four Peaks are no longer exclusive to the well-connected, wealthy investors.

For investors lacking time, private real estate investment companies are ideal for generating the types of inflation and recession-protected returns the wealthy and institutional investors have been enjoying for decades. Discover how you can partner with Four Peaks today, so you too can sit back and watch your money grow.[/vc_column_text][/vc_column][/vc_row]

DISCLAIMER

This is neither an offer to sell nor a solicitation of an offer to buy the securities described herein.

THE OFFERING IS MADE ONLY BY THE PRIVATE PLACEMENT MEMORANDUM. THIS MATERIAL MUST BE READ IN CONJUNCTION WITH THE PRIVATE PLACEMENT MEMORANDUM IN ORDER TO UNDERSTAND FULLY ALL OF THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES TO WHICH IT RELATES AND MUST NOT BE RELIED UPON TO MAKE AN INVESTMENT DECISION.

The offering of securities described herein will not be registered under the Securities Act of 1933 (the “Securities Act”) or the securities laws of any state and the securities are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and such laws. Neither the Securities and Exchange Commission nor any other federal or state agency has passed upon the merits of or given their approval to the offering of the securities, the terms of the offering or the accuracy or completeness of the offering materials. The offering of securities is being made only to Accredited Investors, as defined in Rule 501(a) of Regulation D of the Securities Act. An investment in the securities is highly speculative and involves substantial investment and tax risks. All prospective investors must review the Private Placement Memorandum in its entirety, including the section entitled “RISK FACTORS” before investing.

An investment in Four Peaks Capital Partners, LLC is highly speculative and involves substantial risks, including, but not limited to: (1) Four Peaks Capital Partners, LLC success depends upon the performance of the Manager in managing Four Peaks Capital Partners, LLC and its investments, including decisions involving investment of Four Peaks Capital Partners, LLC’s capital and the acquisition and disposition of properties and there is no guarantee Four Peaks Capital Partners, LLC will raise enough capital to perform its investment objectives; (2) There can be no assurance that a prospective investor will receive any return on investment in Four Peaks Capital Partners, LLC and/or realize any profit on a prospective investor’s investment in Four Peaks Capital Partners, LLC and a prospective investor could lose all or a substantial portion of its investment; (3) The Manager has limited or no net worth and there can be no assurance that the Manager will have sufficient funds to meet its obligations to Four Peaks Capital Partners, LLC or to otherwise financially support Four Peaks Capital Partners, LLC; (4) The Class A members and Class B members have no power to take part in the management of Four Peaks Capital Partners, LLC and have limited voting rights and will not have the opportunity to evaluate or approve any of Four Peaks Capital Partners, LLC’s investments; (5) The Class A Interests and Class B Interests will be illiquid, and the transferability of the Class A Interests and the Class B Interests will be substantially restricted; (6) Four Peaks Capital Partners, LLC may not have the cash flow necessary to make distributions to its members; (7) Four Peaks Capital Partners, LLC will not diversify its investments and, therefore, the success of Four Peaks Capital Partners, LLC will be dependent upon the success of the properties; (8) There are substantial risks associated with real-estate investments and ownership of storage facilities and mobile home parks; (9) There are various potential conflicts of interest among the Manager and its Affiliates and their principals.
Investors must read and carefully consider the discussion set forth under the section entitled “RISK FACTORS” in the Private Placement Memorandum for a complete discussion of these and other risks pertaining to this investment.

These projections are speculative and based on specific assumptions, which, if incorrect, would cause the actual returns to differ materially from the projected returns. You should review the entirety of the assumptions and risks set forth in the Private Placement Memorandum.

Any underlying assumptions and any forward-looking statements herein may not be accurate, the projections herein shown may not occur, and actual results could differ materially due to risks and uncertainties that are beyond the Company’s ability to control or accurately predict. To the extent, the information in this communication conflicts with the information in the Private Placement Memorandum, the information in the Private Placement Memorandum shall govern.

The securities offered are an illiquid investment and involve a high degree of risk; Investors should be able to bear the loss of some or all of their investment. Investors should read and understand all of the risks and the entire Private Placement Memorandum before making a decision to invest. Past performance is no indication of future results and there can be no assurance that Four Peaks Capital Partners, LLC will be able to execute the investment objectives for the Properties or the Offering.

This material is for general information purposes only and does not constitute legal, tax, investment or other professional advice on any subject matter. Information provided is not all-inclusive and should not be relied upon as being all-inclusive.
Any capitalized terms used but not otherwise defined in this Presentation shall have the meanings set forth in the Private Placement Memorandum.

Any reference to “Four Peaks” “we” “our” or “fund,” regardless of capitalization, shall refer to Four Peaks Capital Partners, LLC, and its Affiliates.

For additional risks and disclaimers, visit https://www.fourpeakscapitalpartners.com
Four Peaks Capital Partners, LLC

2024 © Four Peaks Capital Partners™