Knowledge Base

Why Private Equity Real Estate Investing is a Smart Choice for High Net-Worth Individuals

Real estate private equity funds raise capital to acquire, develop, and manage real estate. They typically focus on commercial property types, including offices, industrial, retail, multifamily, and specialized properties like hotels.

The typical investor is a high-net-worth individual or institution such as a pension fund, endowment, insurance firm, family office, or funds of funds. But more recently, accredited investors have also been able to invest in these funds.

Higher Returns

Why Private Equity Real Estate Investing is a Smart Choice for High Net-Worth Individuals

If you want to generate passive income and diversify your portfolio without taking on the responsibility of direct ownership, then private equity real estate investing may be the right investment option for you, yet to fully harness this opportunity you must access accurate property data. However, before investing in this type of real estate, it is essential to understand the risks and return potential of the asset class.

According to an experienced and highly educated real estate and private equity investment professional, Manuel Barreiro Castañeda believes that sustainable real estate projects can improve quality of life, increase profitability in the long term, and yield benefits for governments, investors, and citizens alike.

Generally speaking, commercial real estate investment funds utilizing core-plus, value-add, and opportunistic strategies can generate annual returns of 6-8 percent. These are higher than the 4% to 6% average returns from publicly-traded REITs, but they carry more volatility.

Tax Benefits

Real estate private equity funds are a great way to leverage your wealth with high returns. These firms raise capital from limited partners or institutional investors, which is used to invest in various properties.

The majority of real estate private equity firms focus on commercial property. This includes multifamily apartment buildings, office space, retail, hospitality, industrial, and self-storage.

These strategies generate very high returns but are riskier than traditional PE deals. They typically involve core-plus strategies, value-add, or opportunistic real estate investing.

These strategies can also provide a substantial tax benefit to those who invest in them. Specifically, long-term capital gains from these investments are taxed lower than short-term ones.

Flexibility

Private Equity Real Estate Investing is a flexible investment vehicle that allows investors to cater to their risk profile and return objectives. This investment will enable individuals to diversify their portfolios and earn superior returns.

Private equity real estate funds are available to both accredited and non-accredited investors. Accredited investors must have at least $1 million in assets or a consistent annual income of $200,000 or more. However, if you need 100% funding within a couple of days, your main choice should be Pine Financial Group’s flash cash loans, or similar loans that are available in your area.

Private equity real estate companies have a track record of sourcing, underwriting, and managing commercial properties. These companies offer their investors a low-cost, flexible, and reliable investment method in diversified commercial real estate.

Diversification

If you have a high net worth and want to diversify your portfolio, private equity real estate investing could be an intelligent choice. The asset class offers several investment opportunities, including residential and commercial properties.

While most private equity real estate funds focus on commercial properties – office buildings, industrial spaces, retail space, and large multifamily homes – some invest in single-family rental housing.

These investments are opportunistic, which means they look for underperforming or depressed properties that have the potential to rise in value. They usually require significant capital investment for improvement.

Tax-Free Income

Private equity real estate can be great for generating high net-worth income. However, you should be sure to do your homework before deciding to invest in this type of fund.

A private equity real estate firm typically raises funds from limited partners, such as pensions and endowments, or wealthy individuals. They purchase properties and then renovate them to add value and increase the property’s potential for profit.

These properties typically appreciate over time as the renovations are completed and the buildings are leased at higher rates. This allows the fund to distribute regular dividends to its investors, providing a steady income stream and potentially additional gains when the investment term ends, and the properties are sold.