Broker Check

Private Real Estate Investments: Balancing Benefits and Risks for Portfolio Diversification

April 02, 2024

Considering the potential benefits and risks associated with private real estate investments is crucial for investors seeking portfolio diversification. These investments, available in various forms such as Delaware Statutory Trusts (DSTs), non-traded Real Estate Investment Trusts (REITs), limited partnerships, and private equity funds, offer unique advantages and challenges.

Benefits of Private Real Estate:

  1. Professional Management: Private real estate investments are often managed by experienced professionals, sparing investors from the day-to-day operational responsibilities.
  2. Diversification: Owning real estate assets diversifies portfolios beyond traditional stocks and bonds, potentially reducing overall investment risk.
  3. Potential for Improved Risk-Adjusted Returns: Private real estate historically shows low correlation with public markets, potentially enhancing portfolio performance.

Limitations and Risks:

  1. Illiquidity: Private real estate investments typically have extended holding periods, making them illiquid assets.
  2. Fees and Expenses: These investments may have higher fee structures compared to publicly traded securities, affecting overall returns.
  3. Minimum Investment Requirements: Many private real estate investments require substantial minimum investments, limiting accessibility.
  4. Accredited Investor Requirements: Most private real estate opportunities are available only to accredited investors, potentially excluding some investors.

Before committing to private real estate investments, investors should carefully assess their financial goals, risk tolerance, and liquidity needs. Consulting with our team can provide valuable insights and guidance tailored to your specific investment objectives.


Scott Offerman helps investors navigate obstacles and fix problems which commonly occur during a Real Estate Investment Sale utilizing a 1031 Exchange.


Scott Offerman

Founder

1031 Financial

scott@1031financial.com

Cell: 917-887-0166

www.1031financial.com

By Appointment Only

321 West 44th Street, Suite 200

New York, NY 10036