Allocation within your investment portfolio

I think everyone can agree real estate should be a portion of your overall investment strategy, however the allocation of your portfolio seems to range from 10% to as high as 70% depending upon your investment objectives. Below are some of the main reason real estate should be part of your investment portfolio.

Why Invest in Real Estate?

• Inflation Hedge. Inflation is a decrease in the purchasing power of a dollar. What you could buy with one dollar in the 1950’s now takes $10-$12 to purchase today. Inflation is caused by a number of overlapping factors. For example, during the Covid-19 pandemic, we saw inflation raise the price of goods and services as supply chain issues negatively affected production and delivery. But global pandemics aren’t the only things that cause inflation. Supply and demand, fiscal policy, corporate policy and manufacturing costs can all lead to inflation. Retirement accounts take the biggest hit when the value of the dollar decreases. If you’re concerned about what inflation can do to your retirement dollars, it may be time to consider inflation-hedging investments. Unlike stocks, bonds and mutual funds, investing in real estate can make inflation actually work for you, increasing your income as inflation rises.
• Recurring income. Investing in rental real estate provides regular recurring income for investors. Examples include owning individual properties, buying shares in or investing in a limited partnership.
• Diversification. Many investors own traditional investments of stocks and bonds in their portfolios. Adding real estate investments diversifies your portfolio with non-correlated assets.
• Tax benefits. Owners of individual rental properties may be able to offset their income with depreciation to minimize or avoid income taxes. Some investors can use their rental property losses to reduce their ordinary income taxes as well.
• Tangible asset. Rental properties are physical investments that have a functional use in the economy. Even if the value of the home drops due to market conditions, someone can still live in the house and generate rental income.

Real Estate Investment Options

While real estate investing is a proven wealth-building tool, many busy professionals don’t have time to locate, evaluate, finance, acquire and become the landlord; dealing with tenants, toilets and trash. However, it is possible to achieve the same inflation-hedging advantages without the headaches by investing passively through privately sponsored real estate syndications.
The most common investment options are

Individual Properties
Buying an individual property is the traditional investment option for many investors. You can buy a single-family residence, multi-unit property, commercial property, storage facility or other types of real estate to rent. Some investors manage the properties themselves, while others use a property manager to handle the day-to-day activities. This can have a high cost of entry and may concentrate your real estate holding into a few assets.

Real Estate Funds
Investors can choose to invest ins a private real estate fund with investment goals and strategies in-line with the investor goal and objectives. Investors own shares or membership interests in the Fund. The Fund has ownership across multiple properties and property classes, providing diversification. These Fund have professional management and are passive for the investor. This option also can also significantly reduce the cost of entry to investing in real estate.

Private Lending – Trust Deed Investing
Another Investment that can generate consistent cash flow is to make loans secured by real estate and collecting the interest, basically, you become the Bank. A client-centric SREA can facilitate the underwriting and required disclosures and loan document preparation for these investments. These loans are secured by a deed of trust and typically are shorter term in nature, 6 months to 3 years.

How to Get Started

In addition to aiding you in the identification, acquisition and financing of individual properties. Segue Investment offers four Real Estate Fund investment options. Below is brief description of each Fund’s investment strategies. Please contact us for additional information and to help determine investment suitability.

Segue Equity Fund
The Investment objective of this fund is to identify and acquire dated, undervalued or underutilized residential and commercial real estate assets to renovate, repurpose or convert to the highest and best use and then re-market the property for sale. The Fund’s goal is not to generate cash flow but larger disbursements at the sale of the asset.

Segue Cash Flow Fund
The investment objective of this fund is to acquire and hold stabilized cash flowing properties. This Fund will provide cash flow to the investor.

Segue Debt Fund
The investment objective of this fund is to make loans secured by real estate across a broad cross sections of investment real estate classes. The Fund will generate consistent income for the investors from the interest payment on the loans made by the Fund. This provides diversification across multiple borrowers and real estate assets, helping to mitigate any potential losses or payment disruptions from a single asset.

Segue Fund of Funds
There are many great opportunities and privately managed funds across the US. The investment objective of this Fund is to Invest in other private real estate Funds focused in other geographic or niche markets. We vet the managers, strategies and project assumptions for suitable investments. This strategy provides the highest level of diversification by offering geographic diversity in addition to management and asset diversity. This Fund offers access to other geographical market opportunities without having to be physically located in these different markets.