Real estate investment has always been considered a conservative hedge against a declining market. The great downside has always been liquidity. But through investments in real estate infrastructure, it is possible to invest in smaller, more liquid shares.
Real estate investments can stabilize your investment portfolio. In addition to acting as a stabilizing rudder in stormy economic seas, it is very useful in making the transition from a return-driven investment portfolio to a cash-generating revenue stream you approach retirement age. The first step is understanding the available instruments to invest in this market and performing a real estate portfolio analysis on your existing investments.
How to Add Real Estate Investments to Your Portfolio
The four ways to add real estate to your portfolio include:
- Private equity
- Public equity
- Private debt
- Public debt
These investments come in the form of real estate investment trusts (REITs), direct real estate investment and public and private investment based on real estate equity. By continuing to bring in new real estate investments, you can diversify your conventional investments and mitigate risk in the financial sectors. Real estate investment instruments give you greater flexibility to customize your real estate asset allocation.
For instance, inflation hedging is a great benefit of real estate investment and is due to an owner’s capability to raise rents and inflate revenue when the market calls for it. In addition, real estate investments form a bridge between an equity-based portfolio that increases in value over time to the income generation instrument needed in retirement. It is also worthwhile to get a current professional valuation of your real estate investments.
By definition, investing in private-equity real estate seeks to increase the market value of held assets over time. However, value-added real estate not only boosts the value of under-performing assets, it also generates and income stream that is increasingly attractive as we reach retirement age.
Income Producing Real Assets and Infrastructure
An often-overlooked category of real estate investment includes investment in infrastructure in Arkansas and elsewhere. This encompasses investment in transportation, energy, telecommunications and utilities of real assets. These investments can remain liquid while maintaining higher stability and lower risks that outright real estate investments vulnerable to interest and market fluctuations. If you aren’t currently invested in IPRA or real estate infrastructure, consider speaking with Arkansas experts on how to get started.
As a matter of fact, in the last 20 years, an increased investment in listed real estate and infrastructure has created new opportunities for individual investors. There are still untapped opportunities to build out a risk adjustment in your real estate portfolio by including investing in listed infrastructure as well as properties. IPRA allocation is a better option than government bonds in a risky market and the income generation and liquidity are far superior.
Finding Expert Advice on your Real Estate Investments
For a real estate portfolio analysis in Arkansas, trust Ferstl Valuation Services. Our team is made up of attorneys and appraisers who know the markets and give you the honesty and advice you need. Call today at (501) 313-0641 to ask any questions regarding current or future investment strategies.