Oakland, CA | East Bay; Real Estate Participation Through Investment Companies

Hi, I’m Erik Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients with personalized financial solutions since 2001. Today I want to talk a little bit about real estate ownership.

Many people like to participate in owning real estate. They feel good about owning a physical assets as opposed to participation in securities markets or fractional ownership of a corporation and the profits that come from that corporation. Of course, someone can own real estate directly—a single-family home or apartment building or possibly a commercial building. There are also real estate investment trusts, some of which are publicly traded—and that just means you’re paying a manager to own real estate on your behalf, often times commercial buildings, multimillion-dollar buildings that are occupied and generating income.

Other forms of real estate that come across my desk pretty frequently are private partnerships where you might participate in the ownership of a multi-family property, and where you would have a small slice or a fractional ownership in that property—and again, someone else is doing the work and they’re getting paid to do the work—and you get the income from the property if there is any, and participate in appreciation of the property if the property does go up in value.

There are  many people out there who get the capital to purchase a multimillion-dollar property and in their capital accumulation process, they also get enough money to fix the property up from what it is now, upgrade it and then hopefully increase the rents over time, which can be a good way to create wealth.

There are also opportunities that are somewhat different and unique. I recently looked an opportunity that I’m going to investigate further, which instead of someone buying a property and improving it and increasing the rents and selling it and taking the profits—this is a fund where they focus on permanent ownership of the property and the properties are targeted towards hard-working middle-class folks who either can’t afford a home or don’t want to afford a home, but want a nice stable place to live forever.

This is kind of different because you’re participating in providing something very useful for people that live in parts of the country that might not be growing as rapidly, but are still very stable in their population—stable jobs and stable economy, but less expensive places to live—sometimes the Rust Belt comes up as a term with respect to some of these parts of the country.

It’s a little bit different—you get income from participating in ownership, but you’re also providing a good high-quality place for someone who just needs a place to live. It’s a slightly different motivation than if they’re trying to increase rents and increase the value of the property and then generate a profit on the property. It’s a great concept and there are other amazing real estate operators out there as well. So, if you want to talk about different ways to participate in real estate that aren’t direct, please let us know.

If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.