Are you considering investing in private real estate? When the markets hit a downturn, it could be your time to shine.
Just because a real estate bubble caused the last recession (aka 2008) doesn’t mean that real estate values can’t increase — because they can.
In fact, it can be the best time to invest in real estate.
Here’s why: As a whole, real estate can still produce stable income and is less sensitive to volatility. It can also outperform other typical investment types.
Private Real Estate Produces Stable Income
Real estate investing tends to offer predictability during market downturns because monthly rent payments are always due — they’re not tied to the stock market.
In other words, tenants’ rent payments don’t stop. Furthermore, Class A assets, which include new, higher-valued properties in top condition, attract the top tenant base and are a higher indicator of reliable payments.
Less Sensitive to Volatility
This lower correlation of real estate to the stock market makes it a great hedge against volatility. Private real estate often beat out industrial, retail and office spaces during a recession. These tenants, who often tend to be business owners, must be able to weather a dip in the economy.
Property Can Replace Performance of Other Investments
The quality of the property investment affects how well real estate performs in comparison to other securities like stocks.
However, you must know that there’s a liquidity risk associated with real estate (you can’t just sell whenever you want!). You’re also tied up in a long-term investment, as opposed to short-selling stocks.
Choose Origin Investments
Origin Investments’ preferred equity positions performed well in April and May of this year and continue to perform.
Fortunately, the real estate market didn’t bubble or dip to real estate levels from 2008. The 2008 recession was led by real estate because of excess lending in the market and loose standards, according to Origin Investments’ blog, but debt and equity providers have been responsible over the past ten years to avoid another real estate bubble.
The IncomePlus Fund’s assets continue to perform well during the pandemic. Monthly collections remain above 96 percent and occupancy is stable.
Its Class A multifamily buildings in growing markets positions Origin Investments to better weather the downturn. Workforce housing, defined as Class B and below, may feel the pinch, as this demographic makes up the unemployed majority. However, Origin Investments chose to target a more educated, higher-income tenant less susceptible to layoffs with higher disposable incomes. They typically have higher levels of disposable income, including a savings buffer, so they can pay rent if they do lose their jobs.
About Origin Investments
Origin Investments is a real estate investment firm that acquires office and multi-family properties in eight markets: Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston and Raleigh. The Chicago-based firm also has additional offices in Charlotte, Dallas and Denver. Origin contains $700 million dollars in assets under management. The firm recently raised $151 million for Origin Fund III.
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