Dear Investor,
Over the past 3 years the real estate investment market has seen tremendous growth in some areas as well as losses in other areas. The market as a whole is still feeling the impact of Covid, inflation, and the Federal Reserve's interest rate hikes. Recently, the question on many investors' minds is whether or not private real estate is still a good investment opportunity.
Can private real estate Investments still produce 12%+ returns for investors? At MLG Capital, they know they can! Here are the 4 reasons why MLG believes an investment into their private real estate funds is the smart bet going forward.
By way of disclosure, we have an advertising relationship with this MLG Capital, meaning we get paid for making this introduction and sharing this content. As always with these types of deals, consider this an introduction and not a recommendation. Every deal is unique and the responsibility to vet any and every deal you invest in still lies with you. This opportunity is available to accredited investors only.
First, The Federal Reserve. You want to invest in bonds when interest rates are high but are expected to go back down. When the rates go down, the value of the bond then goes up as people are willing to pay more for a bond with a higher yield. This same philosophy applies to private real estate investing and cap rates. As interest rates and the cost of debt goes down, sponsors and investors are willing to pay more for an asset causing the value of the asset to go up. Currently, MLG has a high interest rate environment caused by inflation and the subsequent interest rate hikes by the federal reserve. Once inflation is in check interest rates should fall, likely into the 2.25-3.00% range, which will drive private real estate prices higher, the opportunity to buy low and sell high is happening now!
Second, reviewing a large amount of deal flow. At MLG Capital, they utilize a dual sourcing strategy where we both partner with other real estate firms (JV Equity Strategy) as well as complete deals on our own in markets where we have an operational presence (Direct Strategy). With this combined sourcing strategy they review over 100 deals every month, presenting them with the unique opportunity to be extremely selective about which deals they pursue for investment.
Third, buying real estate through all cycles. Today MLG is buying assets in a higher interest rate environment, 6 months from now they will still be buying assets but potentially in a very different interest rate and macro-economic environment. They are constantly adjusting assumptions in their underwriting process in an effort to look at the deal and the many economic drivers of investing under a conservative light. A deal that pencils now, when the cost of debt is high, has the unique opportunity to be even more profitable a few years down the road in a different interest rate environment.
Fourth, disciplined, consistent, and time-tested underwriting is pivotal to the success of any deal. MLG defines their deals as smart, where critical assumptions are both believable and achievable at the time the deal is being evaluated for investment.
If you'd like to learn more about MLG Capital and their investment philosophy, please reach out to requestinfo@mlgcapital.com.
Learn more about MLG Capital today
Jim and Brett
James M. Dahle, MD, FACEP
Founder, The White Coat Investor
Brett Stevens, MBA
COO, The White Coat Investor
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