Rani Jarkas Explains – Why is Real Estate an Ideal “Alternative” Investment?

Alternative investments are those that are not part of traditional investments such as publicly-traded stocks, bonds paying a fixed interest rate over a specific period of time, cash-equivalents such as a CD that can easily be converted into cash, or cash itself.

 

Real estate – including private equity and private debt – is arguably one of the least risky types of alternative investments, depending on the asset class invested in. The reason that real estate is a good alternative investment in general is that it checks all of the boxes that passive income investors are looking for.

 

Real estate investments generate recurring cash flow from rents received from tenants and dividend distributions in private equity investments. In fact, high-quality investment real estate is often described as having “bond-like” characteristics, only better.

 

Growth in rental rates and asset value is another reason why real estate makes a good alternative investment. In a commercial real estate investment like self-storage, leases are normally on a month-to-month basis.

 

This means that rents can be adjusted to match the rate of inflation and the demand for storage space in a specific market, unlike residential rental property that typically has 12-month lease agreement or other types of commercial real estate where leases of five to ten years are the norm.

 

Adding an alternative investment like real estate can also create a more stable, balanced portfolio for the passive income investor. Bond-like yields from recurring rental income, asset value growth over the long term, and the inflation hedge characteristics of commercial real estate can provide stability and act as a safe haven to investors through all phases of the economic cycle.

 

Take the time and make the effort to speak to a financial advisor able to understand your current position and your future dreams, and how to get there. Mr. Rani T Jarkas with Cedrus Investments is able to offer sophisticated and objective financial advices, customized investment plans and active asset management to help clients meet personalized investment goals in consistent with risk management and investment horizon goals.