Whether you are a real estate investor, developer, or landlord, by the sheer nature of the business, you tend to be a higher risk-taker. In contrast, we find that those very same clients tend to be very conservative with their non real estate-related assets, i.e., they hold a lot of cash and tend to shy away from stocks. Often, this thinking results from the feeling of having more control over real estate investments than over a fluctuating stock market. Although this “barbell” approach to household asset balance sheets helps mitigate risk when a business is in a downturn, it still may not be optimal with regards to taxes and long-term returns. That’s where we come in to advise our clients. Some ways we help are:
- We slightly decrease their allocation to cash, while increasing the yield on the cash they keep in their “emergency/liquidity/next deal” fund, so we can add a diversified allocation of global stocks to increase their overall household diversification.
- We advise and provide low cost solutions to diversify their real estate holdings in the following ways:
- Real estate sector/type: Rather than more multiple-family, maybe we add holdings focused on commercial office/industrial or forest and timberland.
- Location/size: Institutional real estate funds can offer instant geographic diversification to the global real estate market. (Many investors tend to own properties close to where they live; although convenient, this can increase risk exposures to a local economy.)
Some other services we integrate into plans specifically for real estate investor clients include:
- Balance sheet development and cash flow planning
- Tax planning: business and personal tax-reduction strategies
- Cash management solutions
- Retirement plan development and implementation
- Succession and exit planning
- Insurance planning
- Asset management including access to tax-managed, low-cost, and institutional-priced funds, and direct indexing models with low minimums
- Debt/liability analysis and planning
- Personal real estate investment analysis and tracking
- Educational planning for children’s high school and college (and beyond)
- Estate planning
Charitable planning
To view a more in-depth example of how we help our business owner clients, click here for a case study.