Multifamily investing is the gift that keeps on giving.
It provides investors with cash flow, higher returns than most investment vehicles, and a hedge against inflation. It is also far less volatile than investing in the stock market.
Simply put – it checks all of our boxes!
At NightHawk Equity we are 100% focused on helping people invest in multifamily deals. BUT – we do see the value in making investments outside of multifamily real estate.
Today, we are going to talk about alternative assets that you might consider to help balance out your portfolio.
Join us in the video below, or read on.
Like I said, multifamily investing checks off a lot of our boxes, but it is focused on a single sector: real estate.
Yes, it's a robust sector that performed incredibly well in the recession. But there are other assets that perform well in a different time.
It makes sense to consider other investments with similar benefits, but perhaps focused on another industry. For example, you might consider alternative assets that are a better hedge against inflation, or have better appreciation.
I don’t have all the answers on how you should diversify your portfolio, but I do think that the best thing you can do for your portfolio is to open your mind and think beyond the Wall Street box.
It’s GREAT that you're already thinking about multifamily syndications, which is a major step. Once you're in that mindset, your mind is open to other investments ideas as well.
Related: Investor Mindset Series
There are some amazing things you can do with your money these days. Let’s take a look at some options you may consider.
Alternative Real Estate Sectors
Not all real estate is created equal.
Single family houses are completely different than multifamily. There are different market cycles, different geographies, etc.
There are others too like office, retail, and light industrial. I personally don’t love office and retail just because I saw the way it performed during the last recession. It got hammered!
For the same reason, I didn’t want to get into development. If you’re starting to develop a project now and a recession hits the next year, you’re not selling anything out. You’re left holding the bag.
Some alternative options I do like are mobile home parks and self storage. Okay, I really like self storage.
As I studied more, I have learned that the people who are really successful in self-storage are also managing their own assets. That way they get consistency. It's very difficult to hire third party managers for self storage, which makes it harder (in my opinion) to get into until you achieve scale.
Other than that, I like the way it behaves with cash flow. It’s also recession proof.
Same with the mobile home parks; but I'm not the guy to own mobile home parks. It's just not for me. I also don't like to do Section 8 subsidized housing. I just don’t like it, but I know plenty of people who make great money on these types of assets.
Bottom line, I think it’s important to invest in things that you like and are interested in learning about. We are in the investment game to make money, but it’s also important to feel good about what you are doing and to have some fun with it.
We talked about the importance of having an open mind. Ever since going to the Real Estate Guys investment conference, I’ve started investing in gold, silver, and platinum.
The nice thing about gold is that it’s actually a hedge against inflation.
They say that a hundred years ago, an ounce of gold would buy a very nice suit. Today, an ounce of gold buys a very nice suit. Same thing, right?
Gold preserves its value in absolute terms, versus the dollar. In terms of buying power it stayed the same, versus the U.S. dollar that has eroded every single year.
Let’s be clear: the Fed’s target is to erode your hard earned money. They want to erode the money that is sitting in your bank account by exactly 2%, and they’ve been on track. Inflation may be sitting at 3%, but growth is only 1%.
That’s why gold and precious metals are a fantastic hedge against inflation, worthy of consideration.
Oil & Gas
Oil and gas doesn't really generate cash flow, but it has very good tax benefits. Almost as good as multifamily.
I don't know much about oil & gas, but I'm learning a little bit more about it. I have found that investing in oil & gas carries some significant risks that are unique to the sector.
From environmental risks to pricing volatility and dividend cuts, it’s important to know what you are getting into when you diversify into oil & gas.
Bottom line, it’s a “Boom or Bust” sector that you can’t control. If the well isn’t being drilled and the oil isn’t flowing, the money isn’t moving! You’re either going to make crazy money investing in oil & gas, or you stand to lose it all.
It's very interesting, and something that people should look into. If anything, it will give you a greater sense of your own risk tolerance when it comes to your portfolio.
A good friend of mine, David Zook, raises money for ATM machines.
You’re probably thinking – “Wow! You really can do that?!”
Yes! It’s a great business model that he talked to me about on our podcast a few years back. I was interested to have him on the show because ATM machines behave a lot like real estate.
With ATM machines there’s cash flow. You also get the depreciation of the machines.
In my opinion, anything that behaves like real estate is worthy of consideration! But you have to have an open mind when exploring investment options beyond the norm.
I mean, who would have thought that an ATM machine would produce similar results to a multifamily unit? That’s the power of an open mind.
The more sophisticated we grow as passive investors, the more we should open our minds to alternative investments.
There's something called life settlements that is an intriguing investment vehicle. It's actually an insurance product where a fund will buy people's insurance. These are older individuals that can't afford their insurance anymore, and they've put it into a structured fund.
As an investor, you are basically buying a percentage of it. It’s not correlated to the stock market or to real estate, which is very unique.
This is just another example of the many alternative options that are available to you as a passive investor. Question is – how do you find more of these more unusual investments that not everybody is talking about?
Do Your Homework
The best thing you can do to find these unique investment opportunities is to do the research. Don’t wait for someone else to bring the new idea to you – GO FIND IT!
In today’s age, there are plenty of research resources that are literally available at your fingertips. We’ve included a few at the bottom of this post that go further into some of the alternative assets we talked about today.
Another great way to learn is through events. Earlier I mentioned the Real Estate Guys. They have a very well-rounded look at investing in general. Real Estate is a big component, but their mission is to get investments out of Wall Street and into Main Street America.
If you want to join me at one of these events, check out this calendar. It will tell you the events that I am scheduled to attend with my family.
Or, for a few hundred bucks, you can listen to a recording of last year’s event called “The Future Money of Wealth”. You can learn so much just by listening!
The best thing you can do for yourself and your future is to self-educate. I have a terrific report that you should start with that compares traditional investments with alternative investments, like multifamily syndications. Download it today for free!
Once you are ready to get involved in multifamily syndicated deals, head on over to Night Hawk Equity and hit the “Join” button. We’ll set up a call to discuss your interest in multifamily and see if we are a good fit.
Give yourself some kudos for taking the time to educate yourself today, on the road to financial freedom. We’ll see you in the next video!
Different Types of Real Estate Investments – The Balance
What’s Going On with Gold? – Real Estate Guys Radio
5 Ways the Fed’s Interest Rate Decisions Impact You – Bank Rate
Should You Invest in Oil & Gas? Consider These 3 Risks – Investopedia
Why It’s Patriotic to Not Pay Taxes – Podcast Interview with David Zook
Life Settlement Definition – Investopedia