Diversify Your Portfolio: How a Real Estate Capital Management Firm Can Help

Now that you have a better sense of the different ways in which investors can invest in real estate and the optimistic state of Nashville’s current and future real estate market, we’ll dive into what it means to partner with a real estate-focused capital management firm.

When you partner with an entrepreneurial real estate asset management firm such as Canopy South Capital Management, you can expect boutique-level investment strategies, careful attention to detail, and thoughtful analysis. Our business model is built on leveraging current opportunities in the Nashville real estate market (and beyond) while keeping a keen eye on the future.

The Benefits of Investing in Real Estate

Real Estate Offers Higher than Average Potential Returns

Canopy South aims to deliver an impressive 8% preferred return to investors upon the calculation of net profits. After the targeted return rate is achieved, net profits will be shared with management with two-thirds of profits going to Investors. Ultimately, Canopy South Financial is expected to achieve returns that yield investors up to 8-12% in returns. The way in which the company’s business model is constructed means that its success is entirely dependent on your success. An investment in any fund carries a certain degree of risk and returns are not guaranteed, however, by putting Investors’ interests first, we’re committed to striving for success in Nashville’s rich real estate market.

Real Estate is a Good Hedge Against Inflation

Law 360 recently noted that “Real estate is viewed as a hedge against inflation and rising interest rates, and thus private equity firms are, among other things, looking to put capital into real estate given the anticipation of continued interest rate increases.” Real estate attorneys throughout the country listed “Increased activity from private equity” as a top trend for 2017.

Real Estate Provides Much-Needed Diversification

Real estate has a relatively low correlation to the rise and fall of stocks and bonds in today’s marketplace. In fact, the real estate market generally rises and falls well behind the stock markets, providing investors with a well-rounded investment portfolio. In an article for CNBC, Ilana Polyak writes, “What's more, real estate markets are unique. The factors that can sink home prices in one market can have no bearing on another, though not always.”

Other Considerations for Investing in Real Estate

While there are many benefits to be enjoyed by investing in real estate, there are also a number of issues that potential investors should be ready to address.

Real Estate Can Be Costly to Buy, Sell and Operate

It costs money to make money. Real estate transaction costs (and ongoing maintenance costs) can be significant as compared to other types of investment opportunities. When investing with a capital management firm, however, these costs are typically shared and spread out over of a number of transactions. A larger asset base creates a more efficient model for real estate investors.

Real Estate Holding Require Maintenance

Whether you’re maintaining the day-to-day operations of a rental property or strategically positioning an investment for the long- or short-term, real estate requires ongoing maintenance. Regardless of whether or not you opt to handle maintenance yourself or enlist the assistance of a management company, these costs impact profits. Investors who rely on the expertise of a private equity group rest a little easier knowing that highly qualified fund managers are tending to the long-term profitability of their properties.

Real Estate Can Be Hard to Come By

Unless you’re a highly experienced real estate professional or a savvy private investor with a high degree of liquidity, finding the right properties and securing financing when you need it can be a challenge. To build a truly diversified real estate portfolio, an investor should have a number of different properties across a variety of asset levels and locations.

Finding the Right Private Equity Real Estate Fund and Capital Management Firm

If you are an investor interested in great returns, diversifying your investments, hedging against inflation, and weathering market volatility, then real estate should be a key part of your portfolio. While investing in real estate through a private equity group may be out of reach for average investors, accredited investors can enjoy the benefits of investing in real estate and leave many industry-specific considerations to real estate professionals.

Private equity real estate funds such as Canopy South Financial welcome high net-worth individuals and institutions to invest in commercial and residential lending, investing, and developing. Canopy South provides a diversified approach to real estate and ownership.

Investopedia writes, “Individuals or couples seeking to invest in private equity real estate should locate a firm that specializes in the discipline. Upon examining a private equity firm's options of funds, they should understand the nature of each private equity fund’s structure, which is typically a limited partnership.”

Private real estate investment funds pool the capital of multiple accredited investors to build a robust portfolio of significant assets with a laser-like focus on overall return. This structure allows investors to reap the benefits of having a diversified portfolio managed by someone who specializes in real estate investments.  

Potential investors should have a clear sense of:

  • The Fund’s costs and investment structure

  • The type of investment strategies that the Fund’s managers employ

  • Their willingness to accept risk and long-term investments

Before investing in real estate or in a private equity capital management, investors should consult with their financial advisor to determine if they’re in a position to participate in the process. Then, investors should research a variety of funds and fund managers to find the one that best fits their needs and real estate interests.

Look for a capital management firm that has a strong vision for its fund including lending, investing, and developing; a clear and focused vision for its community and key stakeholders; realistic expected returns; and a well-defined governance structure.

To learn more about our strategies and vision, contact Canopy South Capital Management today.


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