Real Estate Must Be The Cornerstone Of One’s Investment Strategy

Real estate portfolio managers must allocate their resources over the properties they manage for the greatest possible return, and keep their team on track to accomplish the same. Real estate investment fund returns are typically utilized to give investors a profit and a return on capital before the fund sponsor makes a profit. These returns encourage the sponsor to manage the fund to meet its profit goal and work to maintain alignment between the sponsor's interests and the investors. According to Goldman Sachs, real estate is a major sub-sector within hard assets, a broader space that encompasses tangible assets or resources, including infrastructure, equipment, and commodities. The assets are generally classified by usage type, such as office, industrial, retail, residential and hospitality. The risk and return potential varies across asset type and depends on underlying property characteristics like occupancy level, maintenance or renovations, and lease terms. Assets may range from stabilised and fully leased properties to those in need of renovation and repositioning to ground-up development of new properties.

One of the core benefits of investing in real estate is the potential for generating positive cash flow. This is the net income you pocket after subtracting your mortgage payments and operating expenses. Think about buying real estate like sowing a plant. At first, it’s just a sapling, but in course of time it could soar into a towering oak. Real estate usually appreciates over time, making it a smarter choice for building wealth. Tax benefits in real estate are like finding hidden treasure chests within your property. Investing in real estate offers a unique advantage: control. You decide on the property, the tenants and the rent. It’s like being the captain of your ship, steering towards profit shores. The sector is as tangible as it gets. Unlike stocks or bonds, you can see, feel and utilise it. It provides a safety net like few others. Leverage in real estate means using various financial instruments or borrowed capital (like mortgages) to increase potential return on investment.

It’s like using a lever to lift a heavy object – a little effort for a big move. As you pay down your mortgage, your equity – or the part of the property you actually own – grows. It’s a savings account that grows on its own, and better. Rental properties can provide consistent income, which can cover the property’s own costs and generate profit on top of it. It’s like having a business that runs on its own. Real estate can help investors take advantage of current market dynamics, including rising interest rates, inflation and market volatility. The rental growth and net operating income have historically kept up with or outpaced rising costs, serving as both an inflation hedge and a reliable income for investors. In summary, real estate should be a part of your investment portfolio. Allocate a portion—typically five to 10 per cent—to benefit from diversification, steady income and potential appreciation. Remember that each investor’s situation is unique, so consult a financial advisor to tailor your real estate allocation to your specific goals and risk tolerance capabilities.