Nothing is handled with more care than the assets of the super wealthy — not newborn babies, not 300 year old porcelain… nothing.
That’s what makes new strategies among ultra high net-worth investors so fascinating. And these days, according to Dani Evanson of RMA, a west coast based real estate investment and advisory firm, there’s a hot new trend coming out of family and wealth management offices around the country.
Here it is: Ultra high net-worth families from across the country are putting their money together to structure substantial real estate portfolios in anticipation of an upswing in that sector. They see the market bottoming out, they like that it’s a hard asset, and families with knowledge and experience in the sector want to find other families with passive cash so they can acquire even more holdings for a their portfolios.
Evanson has 16 years of experience in the real estate advisory business, and never before has she seen the super wealthy putting their money together like this. It’s like club investing on steroids, because instead of families joining forces on just one deal, they’re putting their money together for larger, more strategic portfolios.
Families without real estate holdings see the opportunity here too, of course. They want to align themselves with smart, experienced investors (or advisors in some cases) that have similar goals.
In the last 6 to 12 months, says Evanson, the family office space has been buzzing around this idea like a water cooler. High net-worth families are putting together networking events and panels, reaching out to each other through their advisors, and hiring outside consultants with deep knowledge of the real estate space to help them work out the details of these alliances.
Clients have called Evanson from everywhere from the west coast to Boston and Pennsylvania wanting to enter “gateway markets” — like New York City and San Francisco, for example — that are already happening. Aligning with another family makes sense to them because the cash is less constrained. Sure, you need to diversify your portfolio with institutional money, but high net-worth families see each other as savvy partners able to participate in the big leagues.
There are pitfalls, of course (thus the need for consultants). Families with experience in sector who are now managing the money of other careful investors want to put a structure and controls in place. Plus, they need to figure out how to report to their new partners.
Passive investors need to know typical terms and protect themselves from disagreements, etc.
After all, no one wants a family feud on their hands over a little old piece of land.
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