A report called ‘Mapping the Location and Assets of the Family Office Ecosystem’ was released by FINTRX. The latter provides data and information on high-net worth individuals and the report provides insight on where these wealthy individuals are investing their funds.
However, real estate investors may find the report hard to digest. They need to be thoroughly assessed, along with their pros and cons as compared to real estate.
Investments and Real Estate
FINTRX collects data from over 2,700 different family offices to contribute to the asset investments of HNWIs. At the top of the list is private equity at 77.7%, The second is hedge funds at 70.2%, and long only at 66.6%. Real estate at 59.6%, direct investments at 41.2%, and finally, venture capital at 30.6%.
The report shows that a significant amount of family offices hold real estate investments and the importance of this asset category to HNWIs.
When pitching to an investor to secure funds for a project, an excellent point is that allocations in private equity and hedge funds are far riskier than real estate. It couldn’t be more accurate since the economy’s evident decline following the Pandemic.
For those hoping to raise capital in real estate projects, the data from FINTRX shows that 72.3% of family offices in North America are exposed to real estate compared to Europe and Asia. It means that the former puts greater emphasis on real estate assets.
Conversing with HNWIs
In hopes of securing capital, investors need to understand and be familiar with the value of real estate in contrast to the other assets that HNWIs often invest in. Since many HNWIs are accustomed to other assets, an investor needs to be prepared to create their pitch to portray the differences between real estate and other allocated assets.
Even though the world is heading into a recessionary stage, real estate is suspected to be in the lead for recovery. Despite the ongoing Pandemic, rents have proved their stability, which shows the strength of residential real estate amidst the mayhem.
When investors are pitching to HNWIs, they will need to keep these points in mind for discussion. Many HNWIs are familiar with real estate and may not always need to hear about the value. Instead, they will want to know how they can benefit from the investment and the investor.
The Rich and Their Advantages in Real Estate
Real estate has been the playing field for the rich and wealthy since as long as anyone can remember. And even though it has been the investment that has been performing the best, wealthy individuals with good connections have often dominated the scene.
However, because of the Pandemic, 2020 has leveled the playfield and offers real estate wealth at a significantly lower cost for individuals to complete their projects and build their dreams.