If you are reading this blog, you are most likely blessed to be wealthy, or advise someone who is. There's plenty of money to live life to the fullest. For now. But how do you preserve that wealth?
One answer is real estate. It is said that 90% of the Forbes 400 index of the world's wealthiest people either made or retain their wealth in real estate. But not just any real estate. These people own high-quality, income-producing real estate, like apartment communities and office buildings. The ultra wealthy hold real estate long term, because they know that is how to preserve their wealth.
Your luxury home, your Alpine ski chalet, and "investment" condos in New York and Miami may (if you are lucky) provide some asset appreciation when you sell them, but in the meantime, they are costing you more than you will recoup. My advice: Enjoy them, but do not count on them to preserve your wealth. Do not expect them to be long-term wealth enhancers.
I just read an ad for an exotic car rental company called "Lou La Vida." (Rent Life.) What a great philosophy! Rent the things that add to your enjoyment of life. Whether it's cars or boats or condos, you can rent them when you want them, and that's a lot cheaper than owning. So Rent Life! But buy future security.
And now is the perfect time. I've been in the real estate business for almost 40 years and I've never seen a better opportunity to invest in multifamily (apartment communities) real estate in the US. Home ownership is at its lowest rate in years, and apartment living is soaring, both for renters by choice and renters by need. And US demographics point to continuing demand for rental housing.
Why? Just look at the traditional American first-time home buyers. They are not buying homes:
- They are burdened with large student loans and other debt. Unable to find jobs after college, they go back to school.
- They don't have the money for a down payment on a home.
- They are delaying marriage and starting a family, which is a major driving factor in home ownership.
- They want flexibility for employment purposes to move to a new job.
So they are renting. And, interestingly, so are their parents and grandparents as they down size or retire.
There are many more reasons to choose multifamily real estate to supplement your investment portfolio: on-going income, asset appreciation, tax advantages. Plus, real estate has outperformed all other asset classes over the past 12 years, and its value does not rise and fall with the stock and bond markets.
And interest rates!!! Right now, with low interest rates, we can leverage funds to provide the greatest returns.
By the way, there are several ways to invest in real estate. At Lloyd Jones Capital, we offer direct investment (as opposed to a REIT which is like buying stock). We have funds that we co-invest with major institutional partners for maximum leverage; we have individual property investments, and we have funds that target specific categories such as workforce housing. Or we can help you acquire a property and become your asset manager to protect your investment.
Good asset management is one of the keys to successful multifamily investing. But the most important, after analyzing and choosing a property, is the day-to-day property management of the asset. Lloyd Jones Capital partners with its sister company, Finlay Management, Inc. to oversee the operations and maintenance. Finlay Management has been in the business since 1980 and is an Accredited Management Organization.
Let me leave you with this reminder: Rent lifestyle; but for wealth preservation, purchase a quality, US apartment complex.
One simple way to protect your wealth.
One easy way to preserve your wealth.
Best way to enjoy your wealth - and keep it.
Rent Lifestyle, but invest in real estate.
Opinion column by Christopher Finlay, Chairman and CEO of Lloyd Jones Capital
Chris Finlay began investing in real estate early in his career as a commercial airline pilot with Eastern Airlines. In 1983 Chris resigned from Eastern to concentrate exclusively on the Finlay Company. In 1990, he began to focus on real estate development, and over the next fifteen years developed and constructed approximately 40 communities and 5000 units, plus 20 post office facilities. At the same time, he expanded his property management company to accommodate the growing multifamily portfolio. In 1998, he moved his entire operation to Florida.