Alternative real estate investments can serve as an important part of an investor’s portfolio, offering diversification while potentially decreasing overall portfolio risk. Private placement opportunities provide investors one such alternative through a potentially high-value strategy. However, these types of real estate investments can come with a number of stipulations and carry quite a bit of risk. That’s why you’ll want an experienced partner to help lead you in the best direction for your investment. That’s where Miser Wealth Partners comes in.
What are private placement opportunities?
Private placements opportunities are generally investments in private enterprises that are not available through public markets, like a stock exchange. These can be restaurants, oil and gas developments, agriculture projects/farmland, water purification projects, a variety of alternative energy ventures, as well as other real estate ventures. Instead of buying a property directly and owning interest in the real estate, securitized interest can be purchased through private placement opportunities and owned under an entity which owns the property.
Who manages private placements?
Private placements are arranged by a sponsor, typically comprised of real estate professionals who design, execute, and manage the investment strategy of the private placement opportunity. The sponsor makes the decisions for the investments of the private placement while investors receive passive income through a hands-off approach in their real estate investment portfolio.
What benefits can private placement opportunities offer?
The hands-off approach is often a very attractive feature of private placement opportunities. Investors can rely on the sponsors’ expertise to carry out investment strategies beyond the scope and/or capacity of the individual investor while collecting truly passive income. Investors don’t have to concern themselves with any management responsibility as these private placements require minimal time commitment from the investor as opposed to direct ownership or investment in real estate. Furthermore, investors gain diversification for their portfolio by owning a portion of a larger asset that they most likely couldn’t own by themselves.
Private placement opportunities also offer non-recourse financing. In most private placements, if debt is used, it’s the sponsor who will be responsible for sourcing the debt. That means the investors aren’t liable for the debt within the investment. For companies, private placements can offer firms an infusion of capital far faster and less expensive than public investment offerings.
What kind of risks come with private placement opportunities?
As we stated earlier, private placements can carry a number of stipulations and risks. First of all, private placements are often investments in the early stages of enterprise development, which means they haven’t fully been tested on the open market yet. Also, these investment options often have holding periods, resulting in “restricted” securities where investors won’t be able to sell their shares for at least a year.
Since private placements are not publicly traded, they typically offer much less liquidity. With public stock options, investors can choose to sell on the open market when there are signs that stock prices are beginning to decline. Private placements don’t offer such a bail-out option.
Despite these risks and stipulations, private placement opportunities can offer an array of dynamic possibilities for portfolio diversification with a low correlation to public markets.
Why should I consider private placement opportunities?
The volume of private placement opportunities has increased in recent years. In the current market environment, private placements are attracting high net worth investors who are seeking diversification with alternatives to public markets. These unique investments can create robust opportunities for companies to generate capital without going public. Plus, they can offer investors early access to a wide range of companies with the potential for steep returns.
Why choose Miser Wealth Partners when considering private placement opportunities?
The skilled advisors of Miser Wealth Partners pride themselves on providing our clients with a menu of investment options to choose from, including private placements in East Tennessee and beyond. We guide clients on which private placements are best suited for their investment goals based on several factors, including financial capacity, risk tolerance, and long-term goals, to name a few. If this investment platform is on your radar, then we invite you to call us today at (865) 281-1616 or click here to set up a meeting at a time that fits your schedule.
