As fund manager, I don’t just look at maximizing returns, one of the most important things I can do is minimize risk. I look at how we differ from other investment options like the stock market, and you’ll see that we offer similar (or better) results with less risk…
Although my job as investment manager is to deliver solid returns, Job #1 is actually to worry less about maximizing returns and worry more about minimizing the risk to the investor. In fact, if you look at the stock market, on average it offers a 7% return.
So what do we offer? We can offer our investors 7% return as well; now, this isn’t a guaranteed return, but the least-risk asset of all real estate offers an average of 7% preferred-return. Although this isn’t a guaranteed return, this carries a lot less risk than you’ll see in the ups and downs you can experience in the stock market! In addition to that 7%, we share in the upside of the asset by 75%, with 25% for us. That’s how we can deliver a mid-teens or better return over a five, seven, or ten-year hold where we’re looking to do anywhere from 2.5 to 3.5x on your capital!
So when you’re looking initially at what appears to be a similar average return (7%), when you actually do a deeper dive and see that we also offer the upside of the asset, and with the benefit of reducing the risk to the investor, it makes sense to apply capital where it can work for you with less risk.
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