Investing in a real estate fund offers an outstanding way to achieve a degree of diversification without the additional effort of repeatedly choosing specific assets.
Funds typically syndicate capital towards an investment purpose or strategy. While some funds have specific assets identified for the fund to acquire, others are blind and have no specific assets identified. Blind funds can vary from being very specific, targeting a certain asset class, market, and strategy, while others can be open-ended giving the sponsor a wide range of options.
The Main Advantages of a Private Fund:
1. Diversification of properties within the parameters of the fund
2. Diversity of strategies
3. Diversity of asset classes
4. Minimizing the risk associated with a single asset
5. Spreading risk across different geographies, economies, and regulatory atmospheres
6. Not tied to or related to changes in the public markets (like REITs)
7. Economies of scale can be utilized
8. Focus on a limited number of accredited investors
Our CAP Plus Diversified Income Fund will invest primarily in larger multifamily apartment communities. Yet, it will also from time to time pursue other types of income-producing properties that are selling at significant discounts due to special circumstances. This gives us the ability to adapt to market and asset-class conditions quickly and modify strategies that will maximize cash flow and total returns. In all cases, the fund will target cash-flowing properties selling below replacement cost.
The past five years and more specifically the recent pandemic have given support to the benefits of a fund diversified across several markets.
The recent acceleration of the long-term trends of migration:
a. from crowded to less crowded
b. from high tax to low tax
c. from high regulation to less regulation and
d. from expensive to less expensive cost of living
has allowed us to react more quickly to favorable conditions and circumstances that one-off syndications or properties would not have allowed us to do.
Combined, these trends support great demand for rental housing and other commercial properties within these areas as population and job growth expands in these markets. They are already heating up the multifamily market. However, there are still select markets where working and middle-class properties sell for below replacement value, offering significant cash yields and the potential for strong long-term total returns. This is where we intend to make most of the fund’s investments.
Read more about The CAP Strategy and the CAP Plus Diversified Income Fund.