The World's Wealthiest Individuals Are Focused On Real Estate - Here's How You Can Build Your Own Real Estate Portfolio With Any Budget

The world’s wealthiest individuals, with a net worth of at least $100 million, have a unique approach to investing that sets them apart from the average investor. According to a recent article from CNBC, these ultra-high-net-worth individuals are focusing heavily on real estate investments.

Salvatore Buscemi, CEO of Dandrew Partners, told CNBC that centimillionaires “don’t invest in get-rich-quick things, illiquid things today.” Instead, they seek to preserve their legacy and wealth by investing in “very strong, stable pieces of real estate,” particularly Class A properties built within the last 15 years.

Real estate investments typically represent 27% of these individuals’ portfolios, according to Michael Sonnenfeldt, founder and chairman of Tiger 21, a network of ultra-high-net-worth entrepreneurs and investors.

So, why are the wealthiest individuals investing in real estate? There are several reasons:

– Stability: Real estate provides a stable, long-term investment that can weather economic fluctuations.

– Cash Flow: Rental properties generate consistent cash flow through rental income, providing a reliable source of passive income.

– Appreciation: Over time, real estate tends to appreciate in value, allowing investors to build wealth through equity growth.

– Diversification: Real estate investments can help diversify a portfolio, reducing overall risk.

While the ultra-wealthy may have the means to purchase entire properties outright, average investors can still mimic their moves and invest in real estate through various platforms and investment vehicles. Here are four options to consider:

1. Real Estate Investment Trusts (REITs): REITs are perhaps the most popular option for average investors to gain exposure to real estate. Companies like Realty Income Corp. O invest in a diverse portfolio of commercial properties with strong credit tenants. Realty Income pays monthly dividends to its investors, making it a great source of passive income. The REIT currently pays out 26 cents per share each month for an annualized yield of about 5.8%. 

2. Arrived: This platform, backed by Amazon.com Inc. founder Jeff Bezos, allows investors to buy shares of single-family rentals and vacation rentals with a minimum investment of just $100. Arrived handles all the management responsibilities, while investors receive monthly distributions from rental income and potential price appreciation. View current offerings on Arrived.

3. Cityfunds by Nada: Cityfunds offers investors the opportunity to capture a piece of the $32.6 trillion home equity market with a minimum investment of $500. Through home equity investment agreements, investors can gain exposure to the real estate market without the need to purchase an entire property. The Cityfunds Yield fund has a target yield of 8% with a guaranteed floor of 7%. View the various Cityfund offerings. 

4. Rhino GP Fund II on CrowdStreet: For accredited investors, the Rhino GP Fund II on CrowdStreet provides access to a diverse range of real estate assets in the Greater Boston market. The fund targets industrial, multifamily, laboratory, research and development, office, and land assets, with a minimum investment of $25,000. Access offering details on the Rhino GP Fund II. 

By investing in real estate through these platforms, average investors can follow in the footsteps of the world’s wealthiest individuals and potentially benefit from the stability, cash flow, appreciation, and diversification that real estate investments offer.

As always, it’s essential to conduct thorough research and consult with a financial advisor before making any investment decisions to ensure that they align with your personal financial goals and risk tolerance.