An Ignoble Experiment: WCI January Real Estate Newsletter — How Our Real Estate Holdings Have Done

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.

Today's Topic: How Our Real Estate Holdings Have Done

Many of you are new to this real estate list in the last year, and you may not be aware that my (Jim) backup plan if The White Coat Investor didn't pan out (my threshold was WCI making >$1,000 per month within two years, and we barely made it) was to start a direct real estate investing "empire." I'm serious about that. Either WCI or the real estate empire would have scratched my entrepreneurial itch just fine, and I had met (and continue to meet) many white coat investors whose portfolio involves a serious allocation to real estate—either direct or passive.

Real estate hasn't been too popular in the last few years. Skyrocketing interest rates in 2022 have depressed real estate returns while stocks (particularly US large cap growth tech stocks) have shot the lights out. Naturally, everything is cyclical, and the pendulum swings back and forth between asset classes. Capitalization rates on real estate have risen substantially over the last four years (suggesting higher future returns) while the S&P 500 P/E ratio has gone up from 20 to 31 (suggesting lower future returns). Don't get caught performance-chasing with your portfolio. Just like you shouldn't have taken all your money out of stocks and put it in real estate in 2021, you shouldn't now take all your money out of real estate and put it in stocks. Markets are notoriously hard to time, but the pendulum certainly swings and trees don't grow to the sky.

Katie and I continue to invest 20% of our portfolio in real estate: 5% in publicly traded REITs (VNQ), 10% in private equity real estate funds with firms like WCI sponsors, and 5% in private debt real estate—such as that offered by the DLP Lending Fund. My favorite of those three sub-asset classes is the debt. It's stock-like returns with almost cash-like volatility, all backed by loans in first lien position. While this investment certainly carries more risk than bonds and cash, the Sharpe Ratio (return minus risk-free return all divided by volatility) has been spectacular for us over the years. I'm not saying that debt real estate can't lose money, but it's far less risky to invest in than equity real estate. Our returns in the asset class over the last few years have been as follows:

2018: 9.1%
2019: 15.8%
2020: 7.6%
2021: 7.7%
2022: 9.5%
2023: 9.1%
2024: 9.9%
2025: 9.9%

After the last four years, we actually have higher returns on the debt side than the equity side, although I wouldn't expect that to persist long term. While not as liquid as VNQ, debt funds tend to be more liquid than equity funds. Their tax-inefficiency remains their main downside, but that can be minimized by investing using qualified (retirement account) money.

The main reasons we invest in real estate are:

High returns
Low correlation with stocks and bonds
Inflation protection
Ability to add value, and
Depreciation-sheltered income.

A few comments about each of those seem appropriate.

High Returns: Real estate tends to have stock-like returns long-term, maybe a little higher with a reasonable amount of relatively safe leverage. Having more than one high-returning asset class in your portfolio is a good thing.

Low Correlation: It's even better if that high-returning asset class has low correlation with the other asset classes. Correlation with stocks is particularly low on the private real estate side.

Inflation Protection: When inflation rises, rents go up, and properties become more valuable. Perhaps more importantly, most real estate is leveraged and hopefully with relatively attractive debt. Long-term, non-callable, low fixed interest rate debt may be the best inflation hedge there is, as you pay it back with inflated dollars.

Ability to Add Value: It's hard to add value to your stock and bond portfolio if you're investing in them properly (low-cost, broadly diversified index funds). Trying to do so will probably subtract value. That's not necessarily the case on the real estate side. The market is just far more local, less analyzed, and less efficient. And when investing directly, you can use your own efforts (sweat equity) to improve or manage the property and add value. A good sponsor of a passive real estate investment can do the same.

Depreciation-sheltered Income: There are few tax benefits in the tax code anywhere near as generous as depreciation combined with 1031 exchanges and the step up in basis at death. Done properly, you or your heirs may NEVER have to pay income taxes on your real estate returns. You may not choose to invest that way, and that's OK (we haven't). But depreciation can still boost your after-tax returns in some pretty cool ways, especially for couples that can use Real Estate Professional Status or the short-term rental loophole to use depreciation to offset their earned income, too.

Real estate is an optional asset class. You don't have to invest in it to retire as a financially independent multi-millionaire. But don't listen to anyone who tells you it isn't even worth considering. Thanks for what YOU do and for being part of the WCI real estate group.

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. 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 50.9 million square feet of total space across the United States, inclusive of more than 44,200 apartment units, with exited and estimated current value exceeding $±.7.9 billion.

MLG Private Fund VII 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 turnkey new construction 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!

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 helps physicians and other accredited investors build financial freedom through the Secure Freedom Fund, our private multifamily investment fund designed for simplicity, stability, and alignment. With more than 14 years of experience and a $450M portfolio, we combine hands-on operations with an investor-first philosophy that prioritizes transparency, stewardship, and long-term partnership.

Secure Freedom Fund is built to meet investors where they are. You can customize your investment to your specific goals - choosing your investment amount, vehicle, electing for steady monthly distributions or allow returns to compound for accelerated long-term growth, and choosing when you exit the investment — customizing your strategy to your goals and season of life.

Led by Nick and Dr. Elaine Stageberg, our team deeply understands busy professionals who want reliable, ethical investments without adding complexity to their lives. With a strong history of achieving targets and protecting downside, Black Swan offers a calm, confident path to grow wealth alongside a team you can trust.

Check Out Black Swan Today!

Goodman Capital (Fund)

Goodman Capital is an alternative real estate investment firm specializing in real estate-backed private lending, built on a foundation of family experience dating back to 1987 when we originated our first senior-secured bridge loan on two multifamily walk-up properties in Harlem, New York. Since then, our platform has grown to over $850 million in closed mortgage transactions and more than 1,000 investor partners, including high-net-worth individuals, family offices, and institutional allocators. Our integrated team of 10 investment and legal professionals operates within a robust institutional framework supported by third-party administrators, auditors, and SEC counsel. Our mission is twofold: to educate and financially empower our investor community with unique access to senior-secured real estate lending opportunities that prioritize capital safety while generating tax-efficient passive monthly income.

Check Out Goodman Capital Today!

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

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An Ignoble Experiment

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2026/01/15

WCI January Real Estate Newsletter — How Our Real Estate Holdings Have Done