Private Investment Opportunities in Alternative Asset Classes
Our philosophy for creating wealth provides for not only diversified tax strategy and investment funds, but also diversity in asset class. Real estate, as an alternative asset class, provides for investments with low correlation to equity markets. But like everything else Prevail does, we’ve taken a different approach than traditional wealth management companies.
The traditional model is to have generic real estate funds (REITS, mutual funds, etc.) that are utilized based on risk tolerance to balance a portfolio. However, as recent history has shown, real estate markets can also have significant swings that present opportunities for significant growth. To that end, we identify off-market opportunities in specific real estate sectors and conduct in-depth analysis, all to provide our clients with specific property investment opportunities.
Why Invest in Real Estate?
Direct ownership in an alternative asset class
Real estate can act as a shield against inflation for a couple of reasons. Firstly, property values tend to rise alongside inflation, meaning your investment holds its value. Secondly, if you’re renting out the property, you can typically adjust rents upwards to keep pace with inflation, providing a steady income stream that isn’t eroded by rising prices. While not a perfect hedge, real estate offers a potential way to combat inflation’s negative effects.
Where We Invest
Real Estate as a Hedge against Inflation
Property Income: is derived by lease payments, and generally speaking, inflation will typically put upward pressure on rent rates. If investors/owners can increase the lease rates, it is a natural hedge against inflation. But it doesn’t impact every sub-sector the same. Properties in industrial and office sectors typically are 4+ years in length, with anchor tenants often having a ten-year or longer contract. In those cases, the cash generated is basically fixed, and real returns would be reduced by inflation. Contrast that to multi-family or hospitality where lease terms are measured in one night or up to 1 year for an apartment, and adjustable rents can help hedge against inflation.
Property Value: is most often calculated based on net operating income and a cap rate. The higher the cap rate, the less valuable the property. The lower the cap rate, the more valuable. Oversimplifying to illustrate, historically, cap rates move up as interest rates rise, and interest rates generally move up to counteract inflation. Yet, it’s again not that simple. There is a counterbalancing force. As prices for materials and labor move up with inflation, new construction is more expensive, leading to higher valuations for both new construction (likely in lower supply) as well as existing properties. We see that happening today with big rises in single-family home prices.
Interest rates for borrowing: inflation devalues currency which causes lenders to charge higher interest rates to make a profit. Like increases in raw materials, that causes developers to be more selective on new construction, which in turn limits supply and consequently increases values in existing properties.
Market Demand: if income, value, and interest rates aren’t complicated enough, the demand for real estate is another variable that impacts real estate performance. Historically, investors demand for hard assets increases during inflationary periods, including real estate, precious metals, and oil which then tends to move values up.
Does real estate provide a hedge against inflation?
Real estate can be an effective hedge against inflation generally. The appreciation in value (not the income production) can work to offset inflation.
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How It Works
Begin Here
At Prevail Alternative Assets we help you through the whole process . As an accredited investor, you’ll gain access to exclusive investment opportunities and a dedicated team to help you achieve your financial goals. We’ll connect with you to discuss your investment preferences and find the perfect fit for your portfolio.
Learn
Learn from the best with our educational videos, podcasts, and blogs. Plus, gain exclusive access to monthly in-person workshops and live webinars featuring highly successful real estate investors. Get the knowledge and insights you need to succeed!
Invest
Be the first to know about exciting investment opportunities! We’ll invite you to attend a live presentation with Q&A, giving you the chance to learn all the details. Once you’re ready to invest, we’ll guide you through every step of the process, ensuring a smooth and informed experience.
Wealth Creation
Grow your wealth and unlock freedom with every smart investment. Build a secure future, one investment at a time. Diversification, passive income, and financial freedom are all within reach. Every asset you add brings you closer to your goals.
