An Ignoble Experiment: WCI December Real Estate Newsletter

Welcome to the Monthly White Coat Investor Real Estate Newsletter!

Thank you for being a member of the WCI Real Estate Opportunities Group! We hope you find the enclosed information and introductions helpful. Remember that we have a financial relationship with each company listed in this email, you generally need to be an accredited investor to invest, and you are still responsible for any necessary due diligence. Consider these to be introductions, not recommendations. This newsletter should be the first step in your due diligence process, not the last one.

Special Announcements

We are excited to welcome Black Swan Real Estate to the group of companies that we introduce to white coat investors. You can meet them and most of the other great companies that we have introduced to you at The Physician Wellness & Financial Literacy Conference (WCICON), happening February 26 – March 1, 2025, in San Antonio. Sign up by the 12th for the sweet swag bag!

Today's Topic: Is Investing in Real Estate Safe During Inflation?

It's been hard to avoid the word "inflation" these past few years. It's been even harder to avoid the impact that inflation has on our everyday lives and even in our presidential election; when things you bought previously are suddenly more expensive, you're going to notice.

Even though inflation has decreased in the past year, it's still worth asking: what can be done to protect your hard-earned dollars during such a trying financial time? The last thing anyone wants to do at a time when inflation is on the rise is to risk losing more money, which is why real estate investing is such a common go-to option during inflation. While no investment is risk-free, real estate might be one of the safer options available to help you navigate an economic downturn—and create an additional revenue stream. As property values and rents go up with inflation, so do the value of your investments in those properties.

But when inflation grows, should you be investing in anything, even something as "safe" as real estate?

Before we discuss it, let's review what inflation is. It's when prices go up to the point where money's purchasing value goes down. In other words, money is not worth as much as it used to be. You can buy fewer goods or services because they've become more expensive, and your money has not kept pace.

So, why invest in real estate during inflation? When investing during inflation, or any period of economic uncertainty, it's best to buy into something that people need, regardless of how much it costs, right?

That includes somewhere to live. This is especially true of rental properties. Since the housing market is so dizzyingly high, people look to rent rather than buy for a number of reasons, whether it's because they have too much debt elsewhere or because they want to buy a house but limited supply has driven up the price so much that they no longer can afford to do so. Investing in real estate, rental properties in particular, could be one of the safer places to put your money during times like that. Besides the burgeoning demand, here are a few other pros to consider when it comes to real estate investing during inflation:

Pros of real estate investing during inflation

Real estate investing doesn't (have to) take up too much of your time: If you opt to be a passive real estate investor (you invest in someone else's deal), you'll find you could earn additional income with a much smaller time commitment than if you were actively investing. By taking the passive approach, someone else handles the property acquisition, building, management, and selling while you still own a part of it. Be aware that there could and/or should be a bigger time commitment on the front end of a syndication-type deal, especially since it behooves you to thoroughly vet the group that's putting it together.
You can increase your property's value: There's little you can do to increase a stock's value. However, if you take a more active role in property management, you could add value to your investment. Building renovations and rent increases are just two steps you could take to make your property—and investment—more valuable.
You control your properties: Invest in the stock market, and you are at the mercy of Wall Street pricing. As a real estate investor, you're mostly in control if you're involved in active real estate: how much you charge rent, who you rent to, and if/when you sell a property are mostly up to you.

On the other hand, maybe you should think twice about investing in real estate during inflation. Remember, there's no such thing as a truly risk-free investment, even when it comes to something as in demand as real estate. As we all deal with inflation, it's important to remember that loss is always a possibility whenever you invest in something. Here are some potential cons.

Cons of real estate investing during inflation

Real estate investing is hard work: Yes, we mentioned that real estate doesn't have to take up a lot of your time, but it's also true that passive investing might yield lower returns than active investing does (and like we mentioned before, it's not really passive at the start of a deal, anyway). But there's a reason why 75% of the physicians in a polls have said they they prefer passive investing vs. active. There's a lot that goes into directly owning properties, including the dreaded 3am my-toilet-won't-flush phone call.
Real estate investing is risky: Net Operating Income from a property and its appreciation are the two main sources of return you'll see from a real estate investment (see more from Dr. Jim Dahle here). That means if something happens to one of those return sources, your income could go down or you could eventually be operating at a loss. Vacancies, non-payments, increased expenses, repairs, and more could lead to your income stream decreasing or disappearing altogether. The other risk you run is your property appreciation could disappear—or the property could depreciate. "Properties do fall in value from time to time, especially when considered on 'real' after-inflation terms, and sometimes they fail to appreciate for very long periods of time," Jim wrote. "Remember, most of the indices of real estate values are not adjusted for the fact that people are exchanging older homes for new homes."

Here's our final note on the matter: everyone has felt inflation for the past few years, and there are only so many ways to shield ourselves from it. Earning additional income through real estate investing could be one of them—just as long as you understand the risks involved. It should also be noted that real estate investing's shielding abilities are at their best when property owners are in it for the long haul and are willing to deal with economic ups and downs, according to Avison Young.

As the global commercial real estate services firm wrote, "For such investors, a significant degree of inflation protection for incomes and strong long-term capital preservation can be added to other investment characteristics, which typically attracts investors to the sector."

Recently Published Articles That Relate to Real Estate

Check out these recent articles and podcasts that relate to real estate from across the WCI Network:

Current Real Estate Opportunities

DLP Capital (Multiple Funds)

DLP Capital is an impact investment company that is focused on doing well while doing good–meaning working diligently to provide great returns to investors while simultaneously tackling four crises in our country. Their investments are straightforward, easy to understand, and historically profitable. They relaunched their fund portfolio to ensure their offering aligns with their primary mission. DLP Capital offers five funds giving more options to a wider range of investors– two that are new to the market and three existing funds. All funds have the following criteria: 1) all DLP funds are evergreen, 2) they invest in critical workforce housing, 3) they are targeted to provide above-market returns, and 4) they pay preferred returns before DLP takes a management fee.

To learn more, watch the DLP Capital Webinar.

Check Out DLP Today!

MLG Capital (Multiple Funds)

MLG Capital is a real estate investment firm, founded in 1987. Focused on serving accredited investors, investment advisors, family offices, and more. Each of the MLG Private Funds target to acquire a geographically diverse portfolio of 25-30+ commercial real estate assets across several key U.S. markets.

Since its inception, MLG Capital and its associated entities have had active, exited or pending investments of nearly 46 million square feet of total space across the United States, inclusive of more than 39,000 apartment units, with exited and estimated current value exceeding $±.6.7 billion.

MLG Private Fund VI is open for investment.

To learn more, watch the MLG Capital Webinar.

Check Out MLG Capital Today!

Southern Impression Homes (Turnkey Homes)

Southern Impression Homes is the parent company of one the most successful Build To Rent Ventures in the United States. They specialize in helping individual investors build successful rental portfolios in high growth, landlord friendly markets in Florida. Focused on new construction homes in desirable neighborhoods designed to maximize landlord profit with better inventory, less tenant turnover, lower maintenance and repairs and a better overall growth strategy for both rents and values. Their system provides full-service in acquisition, building, construction, property management and ongoing client support and education. Most clients come to SI Homes looking for an alternative to the stock market because SI's strategy creates ongoing cash flow, real estate appreciation and an excellent hedge against inflation. For the right investor, their system delivers amazing results to help overcome those issues quickly and completely.

To learn more, watch the Southern Impression Homes Webinar.

Check Out Southern Impression Homes Today!

Origin Investments (Funds and Syndications)

Origin Investments is a private real estate fund manager that helps individual investors protect and grow their wealth by providing tax-efficient real estate investments in the multifamily sector. We build, buy and finance multifamily real estate projects in fast-growing markets throughout the U.S. We also offer credit Funds through our affiliate firm, Origin Credit Advisers, an investment advisor registered with the SEC.

Since our 2007 founding, we have executed over $3.6 billion in real estate transactions and our principals have invested over $90 million alongside our investors. We rely on our market experience and employ Multilytics^SM, our proprietary suite of machine-learning models that forecast rent growth, to help us choose the best properties and markets for investment.

We are accepting new investors for our open QOZ Fund III and IncomePlus Fund, which seek to provide tax efficiency, enhance portfolio yield, maximize growth and minimize portfolio volatility. Additionally, we have recently released Origin Exchange, our newest offering aimed to simplify the 1031 exchange process. Our affiliate firm, Origin Credit Advisers, also offers the Strategic Credit Fund, a private credit Fund open to qualified purchasers (an individual or a family-owned business that owns $5 million or more in investments, excluding their primary residence or any property used for business). The Strategic Credit Fund's objective is to provide a consistent stream of risk-adjusted income with capital protection.

To learn more, watch the Origin Investments Webinar.

Check Out Origin Investments Today!

Wellings Capital (Fund)

Wellings Capital seeks to help accredited investors passively protect and grow their wealth through investing in self-storage, mobile home parks, RV parks, and more asset types throughout the country. Over 800 accredited investors have invested in Wellings Capital funds, which aim to provide value to investors in four primary ways:

Instant diversification across private real estate asset types, operators/sponsors, geographies, properties, and strategies
Extensive, professional due diligence on operators and properties
Access to deals and operators
Better terms

Their sixth fund, the Wellings Real Estate Income Fund, is accepting new investors with a $50,000 minimum investment. The Fund only accepts new capital when properties are identified, so all capital is called up front.

To learn more, watch the Wellings Capital Webinar.

Check Out Wellings Capital Today!

37th Parallel Fund II (Fund and Syndications)

37th Parallel has been doing multi-family syndications for years. Since their inception in 2008, they've completed over $1.1 billion in multifamily transactions while maintaining a 100% profitable investor track record. Their Income and Total Return Fund II is now open for investment. This $40M-$80M fund has a $100,000 minimum. Fund II is focused on acquiring and improving 200-plus unit Class A & B apartment complexes in 13 markets across Texas, North Carolina, South Carolina, Florida, and Georgia. Capital will be called as needed to acquire properties with a goal to have all investors' capital called within 12 months. Their goal is to begin liquidating or recapitalizing fund assets in seven to eight years from inception. Fund II has two share classes - Class A (Current Income) and Class B (Total Return). Class A shares have a 9% annual preferred return and first access to cash flows from operations but capped upside. Class B Shares have a 7% annual preferred return and second access to cash flows from operations along with an initial 80/20 split. We have negotiated a $500 fee discount for you if you go through our links. If you prefer individually choosing which properties you invest in, 37th Parallel still does individual syndications too at a $50,000 to $100,000 minimum investment.

Check Out 37th Parallel Fund II Today!

Mortar Group (Syndications)

Mortar's approach to investments is simple. We are a vertically integrated firm with an experienced team that delivers consistent returns. Specializing in multi-family real estate, Mortar has been the driving force behind over 30 distinctive and successful developments in prime and niche New York neighborhoods since 2001. We leverage over two decades of experience in architecture, development, and asset management to build value and minimize risk for both investors and the residents who live in them. Our winning combination of high-returns and risk-adjusted strategies has led to an excellent track record of investment success.

To learn more, watch the Mortar Group Webinar.

Check Out Mortar Group Today!

Black Swan Real Estate (Fund)

Black Swan Real Estate specializes in helping high-income professionals like physicians achieve financial freedom through private multifamily real estate investments. With 13+ years of experience, our team has built a $375M portfolio focused on vertically integrated management and investor-first principles. Unlike many firms, we prioritize a radical alignment with investors: no GP-level fees whatsoever and no splits/profit for us until our investors receive a 100% return of capital. Our offerings cater to those seeking either long-term cash flow or a fixed return, allowing flexibility based on individual financial goals. Led by Nick & Dr. Elaine Stageberg, Black Swan is uniquely positioned to understand the needs of physicians and busy professionals. With a successful track record of achieving and exceeding return targets, we offer both stability and growth for passive investors.

Check Out Black Swan Today!

EquityMultiple (Real Estate Platform)

Offers equity and debt investments to accredited investors. Equity Multiple is very transparent and invests alongside its investors in every deal, which is unique for a real estate platform. Since it has skin in the game, I expect EquityMultiple to be a little more conservative with its due diligence. Its volume is not as high as some companies, but perhaps that is a reflection of the higher quality of the deals that do show up. Minimum investments are typically $5K-$20K.

Check Out EquityMultiple Today! (Management fee waived on your first investment when using this link)

Fundrise (Private REIT Provider)

Fundrise offers REITs and funds to non-accredited investors. It now has 7 REITs/Funds with various focuses, including income, growth, and various geographic areas. Minimums are the lowest we've seen, just $500.

Check Out Fundrise Today!

We hope you find these monthly newsletters helpful. We appreciate your feedback, both positive and negative, about the real estate opportunities you learn about here and elsewhere.

Jim and Brett

Jim Dahle, MD, FACEP
Founder, The White Coat Investor

Brett Stevens, MBA
COO, The White Coat Investor