Real Estate

Ukraine Conflict: Investors should move their money to safe bets

Blog, Media, Press Release, Real Estate, Real Estate Investment /

by Scott Picken, Founder and CEO of Wealth Migrate

The conflict in Ukraine has impacted all industries and, in turn, global trade and investment. Clashes such as the Russian capture of the Zaporizhia nuclear power station have had ripple effects on the world’s stock markets, with the FTSE 100 dropping by over 250 points in a single day – the biggest dip since March 2020. The turmoil has also seen the Dow Jones falling by 11% in the year to date, the S&P500 by 13.4% and the Nasdaq by 19%. With there being no end in sight to the war, it’s easy to see why investors are concerned. This is not to mention the impact it is now having on inflation, with America experiencing a 40-year inflation high in May 2022, causing further volatility in the stock market. However, it is vital that they don’t get distracted by the noise when it comes to mitigating the impact of volatility.

Markets will always be affected by current affairs, with recent events including South African prime interest rates climbing above 25% in the late-1990s; September 11; the dot com boom and bust; the global financial crisis, Brexit, and now, the Ukraine war. In turbulent times, there are three strategies investors must adopt:

Look to the long-term
What disruptive events of the past reveal is that markets move in cycles and so too do industries, assets, countries, and cities. In times like these, investors tend to struggle with analysis paralysis or take money out of the market, buying high and selling low. But investors must consider long-term cycles and trends when making decisions. What might happen in the next month, the next three months or even the next year, is irrelevant. Rather, think about the long term – the next five, 10, 20 or even 30-year cycles – to maximise that investment.

Opt for safe haven investments
When faced with uncertainty in global world economies, savvy investors make a flight towards safety by diverting capital into assets like property and gold which are safe and predictable. These assets are expected to retain or increase in value during times of market turbulence. The current crisis, for instance, has very little to no direct bearing on real estate portfolios. That said, implications of the conflict are indirect and based on broader macroeconomic impacts such as interest rate hikes. As these tend to fluctuate, again investors will need to maintain a long-term view.

Assets like property are also a hedge against inflation – another side effect of the war. This is because over time, property values tend to remain on a steady, upward trajectory and rent/income or yields are often pegged to inflation.

Moreover, a predictable income has been proven to be one of the best strategies for riding out uncertainty. Investors should opt for assets that can help them earn this – another reason why property is a preferred asset. For instance, regardless of the state of the market, people will always need places to live, buildings where they can receive medical treatment or logistic centres to service e-commerce.

Diversify
Diversification is crucial for building a portfolio that is resilient in unexpected conditions and so investors should diversify their investments across countries, currencies, and assets. US billionaire and investor Ray Dalio says investors should have 15 quality investments that are not tied together, and as long as they do that, they will reduce their risk by 80%. Plus, they’ll increase their risk return ratio by a factor of five. What this means is a very resilient investment strategy.

Technology is enabling people to diversify their portfolios more easily. Previously, investors were stuck investing in one country, in one currency and one asset. Now, with $100, ordinary South Africans can invest in 10 different deals, in 10 different assets, in 10 different countries and in many different currencies.

Uncertainty represents an enormous opportunity for investors. Investing in diversified, sustainable assets for the long term can not only help them weather any storm regardless of whether there’s another war, global financial crisis, rising inflation cycle or crypto boom and bust, but also profit once calmer waters return.

For more information, go to https://wealthmigrate.com

About Wealth Migrate
Established in 2010, Wealth Migrate is a leading FinTech real estate investment platform that helps the 99% invest like the top 1% to create more financial freedom in their lives. In so doing, the company is closing the wealth gap, brick by brick. Wealth Migrate’s mission is to put the power of smart investing in everyone’s pockets by providing people with a safe and easy way of not only investing in residential and commercial real estate markets, and alternative assets globally, but also by diversifying their investment on one platform. This is achieved through the use of technology and crowdfunding. They have facilitated over $1,2bn in deals on 5 continents and with members in 171 countries.

For more information, or to invest, go to https://wealthmigrate.com.

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Real Estate Investments Unlock Financial Freedom

Blog, Media, Online Investment, Press Release, Real Estate, Real Estate Investment, Uncategorized /

South Africans are struggling to achieve financial freedom with 34% not having enough savings to last more than a month if they lost their income/jobsi. However, this freedom can be within reach through investing in quality assets such as real estate to build up a passive income.  

“Financial freedom means having sufficient savings, investments, and cash on hand to afford the lifestyle you want,” says Scott Picken, Founder and CEO of Wealth Migrate, a leading fintech real estate investment platform. “Simply put, it’s the freedom to choose, and a steppingstone towards this is to build a passive income which is derived from investing your money in a product that generates profits, creates stability, security, and ultimately, freedom in your financial life.” 

When it comes to ways that people have been supplementing their income, Picken explains that investing in cryptocurrency such as Bitcoin has been rising over the past couple of years. “It is important to note that although you can secure a triple return on investment, the only way to get your money out is to sell.”  

He points out that real estate is one of the tried and tested investment vehicles through which people can earn a passive income. “In fact, 49% of the world’s wealth is held in property where people not only create their wealth but protect it too. However, only 12% of the global population has access to residential real estate and less than 1% has access to commercial property, which is where the real wealth is.” 

“It is for this reason that Wealth Migrate has reduced its minimum investment fee from $100 (approximately R1,570) to $10 (approximately R157) to give more South Africans greater access to the global real estate market,” says Picken.  

To assist new investors to get their foot in the door and work towards financial freedom, he shares six steps to real estate investing:  

  1. Belief: Henry Ford has been quoted as saying ‘whether you think you can, or you think you can’t – you’re right’. And the same applies to the belief that investing will help you find financial freedom. 
  1. Knowledge: The next step requires the investor to do research and to learn about the properties in which they would like to invest.  
  1. Accessibility: This refers to the action of investing – you can have all the knowledge about your desired investment, but unless you actually do something with it, it’s useless. 
  1. A system: Next, your system is what helps you manage your portfolios. 
  1. Accountability: As with anything new or difficult, the chances of doing it on your own are very small, but an accountability partner can help. 
  1. Results: This is the profits from your investment. If you want to get wealthy, you’ve got to get results.   

“Potential investors often believe this is a linear progression, but in fact it’s spiral, because once the results of your investment have been realised, you can go back to step one and reinvest all over again with a strengthened belief. I call this an upward spiral,” explains Picken. 

“The challenge is that it works the opposite way too,” he says. “A downward spiral exists because if the belief, knowledge, access, a system, and accountability are not there then you get no results. No one learnt to walk by reading a book, they did so through action, and I believe that the same applies to achieving financial freedom.” 

Picken shares that wealthy people prosper due to the habit of consistent investing. “Our philosophy is that, by dropping the minimum investment from $100 to $10, we can give a lot more people the opportunity to participate in the property market and start their journey to financial freedom. Over and above accessibility, we are giving them the ability to diversify their investment, enabling them to invest in 10 deals and assets across various countries and currencies.” 

He adds that by lowering the minimum investment fee, this also gives investors the opportunity to reinvest what they earn from their investments more easily.  

“To achieve financial freedom, South Africans need to take action and invest. Now is the time to take the next step,” concludes Pickens.  

The minimum investment fee will be $10 only until the end of May 2022. For more information, or to invest, go to https://wealthmigrate.com.  

About Wealth Migrate 

Established in 2010, Wealth Migrate is a leading fintech real estate investment platform that helps the 99% invest like the top 1% to create more financial freedom in their lives. In so doing, the company is closing the wealth gap, brick by brick. Wealth Migrate’s mission is to put the power of smart investing in everyone’s pockets by providing people with a safe and easy way of not only investing in residential and commercial real estate markets globally, but also by diversifying their investment. This is achieved through the use of technology and crowdfunding. For more information, or to invest, go to https://wealthmigrate.com.  

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Industry snapshot – a look into medical buildings

Asset Class, Medical Buildings, Real Estate, Real Estate Investment, Uncategorized /

We’ve collated an overview of different viewpoints on medical office buildings (MOB) investments to provide a balanced perspective to potential investors. Look out for our upcoming industry report on medical real estate. Click below to register for the alert, and we’ll send it out when our industry report is available for download.

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Medical office buildings: asset class 

Think of upward growth in recent years followed by increased demand for outpatient services, including a consistent and robust performance. That’s one of the many reasons why the medical office buildings (MOBS) asset class remains a popular choice for investors. A subset asset class,1 MOBS are featuring strongly in investment portfolios of experienced real estate investors as global healthcare demands increase. This asset class has evolved to cater for tenants in the medical field to consult with patients and perform various surgical procedures.  

In this article, we examine the opportunities for investing in medical office real estate and how this asset type is maintaining its strong performance during the COVID-19 pandemic. 

Medical buildings perform well 

According to EquityMultiple, “compared to other asset classes, and the overarching office class specifically, MOBS generally exhibit uniquely steady long-term occupancy rates.” 2 CBRE’s 2019 Healthcare real estate investor and developer survey revealed that 99% of commercial real estate (CRE) firms in 2018 and 2019, found the occupancy of their medical office portfolios either remained stable or increased.3 The growth of MOBS has been significant as can be seen in the graphs below.  

EquityMultiple also found the average rental price for 2018 jumped to $23/SF, amounting to a staggering 1.4% yearly increase.4 

Outpatient healthcare 

Outpatient healthcare is simply services outside of a hospital, from a clinic to a private practice that includes the diagnosis, observation, consultation, treatment, intervention, and rehabilitation of medical conditions.5 The advancement of medical tech has enabled clinical innovation and more specialised treatments. 

These EquityMultiple statistics reveal the upwards growth curve for outpatient healthcare services:6 

  • The number of outpatient centres across America increased 51% from 2005 to 2016, with no signs of this slowing down 
  • To keep up with the demands of local healthcare, MOBS are being rapidly developed 
  • 2019 was a pivotal year for MOBS in Chicago, Cleveland, the Inland Empire region, and Atlanta, as these regions reflected the most growth 

Healthcare services and the effect of COVID-197 

Access to healthcare is a significant need for all. Telehealth has been viable alternative to traditional medical services during COVID-19, but doctors can’t practise all branches of medicine effectively with only virtual patient check-ups. While COVID-related closures have affected the healthcare industry, there will no doubt be a surge in services, due to patients that need basic and specialised treatments during and after the pandemic. Patients diagnosed with hypertension, diabetes and diabetes-related complications, cancer, and cardiovascular conditions have suffered from a lapse or lack of healthcare services since the COVID-19 pandemic.8 

The challenges of investing in medical office building assets9 

Before we look at the challenges of investing in medical office building assets, it is important to understand what type of medical office buildings we’re referring to as assets. 

HBRE, a healthcare real estate firm has a clear understanding of the MOB sector: 

  1. Hospital campuses – by necessity are large spaces that are costly, as various equipment and machinery need to be on for the hospital to function. These facilities also need a secondary power source for emergencies and specific requirements for plumbing, electricity and so on, to accommodate the many people that use the healthcare services daily. 
  1. Medical offices – like hospitals these spaces also have the same requirements but are set to a smaller footprint. If a medical office building is more than 250 yards from the hospital, the hospital outpatient department (HOPD) can’t claim reimbursement rates. There is provision for an off-campus HOPD, but the site still needs to be within 35 miles of the main campus. 
  1. Retail medical offices – only treat patients with acute illnesses, this service is specialised and may not offer the full range of healthcare options that a hospital does. 

Global healthcare: 202210 

Deloitte’s 2022 Global Health Care Outlook focuses on six main factors that will influence health outcomes. While we acknowledge that everyone will have their own needs and services, this lends itself to the realisation that organisations in this industry must start to personalise healthcare experiences.  

We’ve included a summary of this list: 

Consumer and the human experience
Care model innovation
Digital transformation and interoperable data
Social-economic shifts
Collaboration
Future of work and talent

The model of care has changed from a focus on the physical body only to a patient’s mental state and general well-being. From using health data to track and monitor the patient’s health with their consent, to a sense of empathy in how healthcare is provided, healthcare has pivoted due to COVID-19 to include more at-home prescription deliveries, remote consultations, and digital diagnostics. IT systems that offer this convenience of real-time data offer clues to behavioural research, patient habits, and even link people to a like-minded community where healthcare organisations and companies have more access to their patients’ lives than ever before. 

Medical office building trends: America11 

America’s aging population is growing by an estimated 36% according to the CCIM Institute, and those people will need at least three times the amount of healthcare services than younger people. A new law, the Patient Protection and Affordable Care Act, also gives 32 million citizens the right to health insurance. It can be safely assumed that this will have a positive effect on job creation among health care practitioners, which would lead to growth in demand for medical office buildings. 

America is a good location for medical office buildings12 

Not only have health services have been partially or completely disrupted in many countries, but worldwide COVID-19 has also taken a physical, mental and financial toll. One thing that is clear, is the need to prioritise adequate holistic healthcare services for inpatients and outpatients alike. 

Americans’ health status has regressed over the last year as many COVID-19 survivors suffer from long-term health issues due to the pandemic. During this crisis, opportunities arose as the industry evolves towards a seamless and integrated patient-provider relationship. 

Colliers 2021 Healthcare Marketplace Report provides much-needed insight into how the MOB field is performing and where it’s doing well: 

  • The US MOB vacancy rate was 8.6% at the end of 2020, versus 7.8% in 2019 
  • In 2020, demand outpaced supply across the top 50 metro markets 
  • Average MOB triple net lease rents were $20.95 per square foot, up from $20.22 per square foot in 2019 
  • MOB deliveries in 2020 totalled 20.2 million square feet, down from 22.5 million square feet 
  • MOB sales volumes held up well in 2020, totalling $11.1 billion 

The US market clearly shows high demand, and we believe that it has strong fundamental factors supporting investment into the MOB asset class. It’s for this reason that we believe the Hamilton-Young Medical Center makes for an appealing investment. Momentum Weatherly LLC’s acquisition of it provides an opportunity to invest in an American MOB with a strong rent roll, that’s generating immediate cash flows. 

VIEW OUR MEDICAL OFFICE INVESTMENT

1 (March 2021). ‘Investing in office real estate’. Retrieved from EquityMultiple. 
2 Angelini, C. (August 2020). ‘Medical office building real estate in focus’. Retrieved from EquityMultiple. 
3 (2019). ‘2019 Healthcare real estate: investor and developer survey results’. Retrieved from CBRE. 
4 Angelini, C. (August 2020). ‘Medical office building real estate in focus’. Retrieved from EquityMultiple. 
5 Abrahams, K., Balan-Cohen, A., and Durbha, P. (August 2018). ‘Growth in outpatient care’. Retrieved from Deloitte. 
6 Angelini, C. (August 2020). ‘Medical office building real estate in focus’. Retrieved from EquityMultiple. 
7 Angelini, C. (August 2020). ‘Medical office building real estate in focus’. Retrieved from EquityMultiple. 
8 World Health Organization. (June 2020). ‘COVID-19 significantly impacts health services for noncommunicable diseases’. Retrieved from World Health Organization.  
9 (December 2020). ‘The pros and cons of each type of medical facility’. Retrieved from HBRE. 
10 (2021). ‘2022 Global health care outlook: are we finally seeing the long-promised transformation?’. Retrieved from Deloitte.
11 Wassik, P., and Carlson, D. (2022). ‘Medical office trends: hospital affiliation is a strong indicator of MOB asset value.’ Retrieved from CCIM Institute.  
12 Janus, S., Seaward S., and Larson, N. (April 2021). ’2021 Healthcare marketplace report’. Retrieved from Colliers. 

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The commercial real estate outlook for 2021 in the United States

Investing, Real Estate, Real Estate Investment, Uncategorized /

Changes to the global investment market from 2020 leading into 2021 have been affecting commercial real estate, and Wealth Migrate analised what this means for you. While the markets settle down and start returning to normal, this gives investors opportunities to make smart decisions on how to grow wealth as the economy starts to resume. [1] Globally, countries are also implementing large-scale COVID-19 vaccinations within their borders, which will assist in restoring normal activity to economic markets.[2]

We agree with Forbes that the following four main factors will be the driving force for investment strategies in this market:[3]

  • Understanding investor behaviours and reasons
  • Establishing secure building spaces — working from home became a priority due to COVID-19, resulting in more vacancies for commercial offices in high-traffic areas[4]
  • Increasing efficiency through tech — e-commerce grew exponentially during the pandemic with businesses tailoring its ”just-in-time inventory model to a just-in-case approach”[5]
  • Identifying challenges and vulnerabilities in your investment portfolio assets

Commercial real estate asset classes also differ according to location, and you should plan your investment strategy accordingly.[6] Investors looking to America can expect “a high diversity of potential outcomes in play and an outlook of a nearly 40% increase in total U.S. transaction volume according to CBRE”.[7] Knowing the latest trends and predictions for 2021, will help you decide where to focus your investment plans in the American commercial market.

Here are six emerging trends and insights you should be aware of this year:
  1. Industrial
    The increase of online shopping has driven up demand for the final distribution center to the shopper at home. Malls are being looked at to turn into potential distribution centers.[8]

  2. Hospitality
    Occupancy and revenue were hit particularly hard but are now seeing a slow recovery due to the return of travel (locally and internationally) and business conferences. Further research shows it might take up a few years for hospitality to return to pre-2019 levels.[9]

  3. Office
    The move to remote working has hit offices very hard, particularly in downtown business centers. Offices have been the hardest hit of the commercial assets during 2020, but this has given opportunistic groups looking to expand, a chance to invest in prime commercial real estate.[10]

  4. Multifamily
    Multifamily apartments have been the best performing asset during 2020 with strong occupancy and collections rates that have been helped by stimulus checks and savings. The demand for affordable financing has greatly increased for assets in this class.[11]

  5. Student housing
    Top tier campuses are absorbing students from nearby schools, causing a demand for housing. Schools have also converted on-campus housing to single occupancy, driving up demand for off-campus housing that are within walking distance of campus.[12]

  6. Medical office
    Medical buildings that have tenants offering critical care and procedures, and not optional care and procedures, should be considered. A strong location and tenants are a must, as there is a trend shifting to in-home care.[13]

These are promising signs for investments in the American commercial real estate market, and we recommend that investors choose their asset portfolio with care. In the long-term, Wealth Migrate believes that investors that have done their research will benefit from the unique opportunities in this market.

[1] Gora, B. March 2021). ”Commercial Real Estate Investing 101 in 2021′. Retrieved from Commercial Property Guide.
[2] Ventura-Rozen, G. (March 2021). ‘What 2021 Looks like for the commercial real estate market’. Retrieved from Forbes.
[3] Ventura-Rozen, G. (March 2021). ‘What 2021 Looks like for the commercial real estate market’. Retrieved from Forbes.
[4] Ventura-Rozen, G. (March 2021). ‘What 2021 Looks like for the commercial real estate market’. Retrieved from Forbes.
[5] Ventura-Rozen, G. (March 2021). ‘What 2021 Looks like for the commercial real estate market’. Retrieved from Forbes.
[6] Cambridge Associates. April 2021. ‘US real estate outlook: patience required’. Retrieved from Cambridge Associates.
[7] Cambridge Associates. April 2021. ‘US real estate outlook: patience required’. Retrieved from Cambridge Associates.
[8] Berry, J. and Feucht, K. (December 2020). ‘2021 commercial real estate outlook’. Retrieved from Deloitte.
[9] Berry, J. and Feucht, K. (December 2020). ‘2021 commercial real estate outlook’. Retrieved from Deloitte.
[10] Berry, J. and Feucht, K. (December 2020). ‘2021 commercial real estate outlook’. Retrieved from Deloitte.
[11] Berry, J. and Feucht, K. (December 2020). ‘2021 commercial real estate outlook’. Retrieved from Deloitte.
[12]  THRESHOLD Agency. (February 2021). ‘The future of student housing in a post-COVID world’. Retrieved from THRESHOLD.
[13] Eisenberg, R. (September 2020). ‘Seven urgent changes needed to fix senior living’. Retrieved from MarketWatch. 

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Update on property investments: South African Investors in 2021

Investing, Online Investment, Real Estate, Real Estate Investment /

Following the global challenges from COVID-19 and how it has affected economies and investment planning, Scott Picken Chief Executive Officer and founder of Wealth Migrate and scenario planner Clem Sunter have joined forces again, to provide a much-needed update for South African investors on the state of property investments.

Sunter’s latest book co-authored by Mitch Ilbury on Thinking the Future – New Perspectives from the Shoulders of Giants, seeks to futureproof strategies to restructure SA’s economy and create local opportunities for growth.[1] While Picken’s perspective on this is still the same, and he wrote this in his 2014 book Property Going Global, “The challenge is: do you have the right information, are you choosing the right partners, making the right investments and, most importantly, asking the right questions?”[2]

In line with this ideology, they’ll team up in an exclusive upcoming interview on 17 August 2021 to expand on the following factors:[3]

  • The scenarios for the global economy
  • The scenarios for the South African economy
  • What do we plan for and is there a future in property investments?
  • How does this impact your investment strategy?
  • What types of investments and asset classes are good decisions, and what should you be aware of when investing?
  • Which countries offer profitable real estate investments?
Scenario planning for the South African property investor

Picken authored the book Property Going Global, and it detailed his expert advice on investing with confidence to create global wealth.[4] As a prolific author, Sunter has written a series of books based on his best-seller The Mind of a Fox co-authored by Chantal Ilbury, which focused on a technique for speculating on the impact of future scenarios by assigning “flags” for the probabilities.[5]

Based on Sunter’s methodology, Picken provided his outlook on investing in real estate with his four-dimensional model, which covered fundamental theories on the Global Investment Due Diligence System.[6] His framework considers the implications of worldwide economics as well as local factors from the South African viewpoint, that play into making investment decisions. His vision with his business Wealth Migrate, is to offer investors a convenient online method through crowdfunding to acquire residential and commercial property in South Africa and globally.[7]

When deciding to invest, knowledge and a solid understanding of the real estate industry is key, not only is thorough research required, but you also need to decide how much you can afford to invest. This can be daunting especially for new investors and even for current investors that are trying to hedge their bets on a wise investment, and we’ve made this research easier with an upcoming interview from Wealth Migrate

Investor insights

Sunter’s experience at Anglo American from the 1970s and onwards, set the tone for his career as a futurologist in scenario planning.[8] Clem Sunter, an acclaimed scenario planner and strategist, was responsible for the foreword of Picken’s book Property Going Global, and endorsed it according to his professional experience in the field.

In his foreword he highlighted that, “…we ask individuals or companies to gauge the impact of the scenario on them and, depending on the probability, decide what should be done to chase the opportunities and counter the threats.”[9]

To help you make informed decisions for the future, join Picken and Sunter on for a talk about global scenarios for the South African investor and the way forward. Click here to register for the webinar.

[1] Sunter, C. (July 2021). ‘Thinking about the future – Scenarios for South Africa with Clem Sunter’. Retrieved from Youtube.
[2] Picken, S. (2014). ‘Property Going Global: How to create global wealth and invest with confidence.’ Retrieved from Property Wheel.
[3] Picken, S. (July 2021). ‘What can you learn from one of the world’s best scenario planners – Clem Sunter?’. Retrieved from YouTube.
[4] Picken, S. (2014). ‘Property Going Global: How to create global wealth and invest with confidence.’ Retrieved from Property Wheel.
[5] Sunter, C., and Ilbury, C. (2001). The Mind of a Fox’. Retrieved from Entertainment-online.co.za.
[6] Ryan, C. (March 2021). ‘Talking alternative investments and offshore property’. Retrieved from Moneyweb.
[7] Ryan, C. (March 2021). ‘Talking alternative investments and offshore property’. Retrieved from Moneyweb.
[8] (2021). ‘Clem Sunter – Scenario planner – futurologist and keynote speaker – Cape town and Johannesburg’. Retrieved from Entertainment-online.co.za.
[9] Picken, S. (2014). ‘Property Going Global: How to create global wealth and invest with confidence.’ Retrieved from Property Wheel.

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How you should invest in commercial real estate: Crowdfunding vs REITS

Investing, Real Estate, Uncategorized /

At Wealth Migrate we believe in our offering and helping our investors navigate the world of real estate assets. To this end, we’ve examined the fundamental differences between crowdfunded and real estate investment trusts (REITS) assets, as this is a commonly asked question of which investment vehicle is better.

With real estate being one of the biggest asset classes globally and a trusted method for profitable investment, most investors are keen to invest.[1] This becomes tricky when considering which route is best and how you should invest in real estate.

What crowdfunding and REITs entails

Whenever real estate investing is discussed, there are different investment options for investors, two of the most popular methods are crowdfunding and real estate investment trusts (REITS).[2] Although both are invested in real estate, there are some fundamental differences between the two that range from liquidity, to risks, tax consequences, and barriers to entry.[3]

The key differences for both investment methods:[4]

  • A REIT is a company that owns and operates income-producing real estate. 
  • Typically, REITS are spread out over a portfolio of properties in a single asset class. 
  • Crowdfunding real estate is when a group of investors are purchasing one property and pool together their money to purchase it.
  • For crowdfunding there are only one or a few properties that the investor is invested in, and usually only accredited investors are allowed to invest.

Liquid

REITS are highly liquid, meaning that they can be bought and sold easily, so if an investor needs money, this is a convenient method of investment.[5] The same cannot be said for an investor that has a share in crowdfunded real estate that wants to sell it off quickly. Shares in a crowdfunded real estate are not transferable and the money is only received at the sale of the project or during refinancing.[6]

Risks

REITS offer a steady income that comes with the costs of having lower returns.[7] In this regard, there are REITS costs for covering the operation of the REITS and other expenses that are incurred before the investor is paid. On the other hand, crowdfunded real estate has more inherited risks because it is a single project and the equity partners in a deal.[8] As a result, the income is not as predictable, and the returns can vary from the predicted figures.

Tax consequences

REITS are considered paper assets, with the taxation different to investing directly in real estate as a partner. REITS can be purchased with tax-deferred retirement accounts, but the dividends from REITS are taxed as ordinary income.[9] Investing in real estate directly allows investors to be considered as partners and take advantage of tax-benefits such as depreciation, this allows investors to receive tax credits to reduce their taxes.[10]

Barriers to entry between REITS and crowdfunded real estate

Purchasing REITS is like buying a share in a stock where an investor can buy as much as desired with no minimum investment amount.[11] On the other hand, crowdfunding real estate has specific requirements for a minimum investment,[12] and this needs to be considered by investors that accept and understand the nature of these investments, before investing.

With all these factors to consider, it’s important that when you invest you understand the strategy and risks between REITS vs crowdfunded real estate. Both are attractive options, but your decision will depend upon your personal preference and your level of investment.

[1] Picken, S. (2019). ”Direct Real Estate Investing vs REITs vs Syndication vs Crowdfunding vs Collaborative SMART InvestingTM”. Retrieved by Scott Picken.
[2] Bryant, S. (April 2021). ”REITs vs. Real Estate Crowdfunding”. Retrieved by Investopedia.
[3] Frankel, M. (April 2021). ” Where to Invest: Real Estate Crowdfunding vs REITs”. Retrieved by Millionacres.
[4] Bryant, S. (April 2021). ”REITs vs. Real Estate Crowdfunding”. Retrieved by Investopedia.
[5] Benson, A. (May 2021). ” Real Estate Crowdfunding: what to consider”. Retrieved by NerdWallet.
[6] Picken, S. (2019). ”Direct Real Estate Investing vs REITs vs Syndication vs Crowdfunding vs Collaborative SMART InvestingTM”. Retrieved by Scott Picken.
[7] Picken, S. (2019). ”Direct Real Estate Investing vs REITs vs Syndication vs Crowdfunding vs Collaborative SMART InvestingTM”. Retrieved by Scott Picken.
[8] Frankel, M. (April 2021). ” Where to Invest: Real Estate Crowdfunding vs REITs”. Retrieved by Millionacres.
[9] Benson, A. (May 2021). ” Real Estate Crowdfunding: what to consider”. Retrieved by NerdWallet.
[10] Frankel, M. (April 2021). ” Where to Invest: Real Estate Crowdfunding vs REITs”. Retrieved by Millionacres.
[11] Benson, A. (May 2021). ” Real Estate Crowdfunding: what to consider”. Retrieved by NerdWallet.
[12] Bryant, S. (April 2021). ”REITs vs. Real Estate Crowdfunding”. Retrieved by Investopedia.

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The future of senior living in the US

Crowdfunding, Investing, Real Estate, Real Estate Investment, Uncategorized /

The advent of Kathleen Casey Kirschling’s 75th birthday denotes not only a long-lived life, she’s also the oldest baby boomer on record out of an estimated 76 million baby boomers born between 1946 and 1964.[1] As the population of baby boomers around the world ages in the upcoming years, there will be more demand for senior living needs and accommodation,[2] especially as it has been predicted that baby boomers will live “well into the second half of this century”.[3]

The advent of Kathleen Casey Kirschling’s 75th birthday denotes not only a long-lived life, she’s also the oldest baby boomer on record out of an estimated 76 million baby boomers born between 1946 and 1964.[1] As the population of baby boomers around the world ages in the upcoming years, there will be more demand for senior living needs and accommodation,[2] especially as it has been predicted that baby boomers will live “well into the second half of this century”.[3]

A recent webinar from a panel at Cornell University highlighted some major changes with COVID-19 and the impact the pandemic has had on senior living. Senior living is a specialised field as it overlaps in the hospitality, healthcare, and real estate sectors. Due to the economic downturn in 2020, there was less capital for both the operators and the residents. Another big concern is how facilities are dealing with visitors and staff during COVID-19, with the biggest issue facing seniors being loneliness and depression from the social distancing, and the lack of community that the seniors are used to having before.[4] As the focus on senior living has become increasingly important, there’s been a noticeable shift on improving acute care needs.[5]

Going forward, in-home care is also going to be an alternate solution, particularly for areas without large senior living centres.[6] As people are living longer and healthier lives even though retirement age hasn’t changed, the current generation is more open to the idea of living independently from their children and grandchildren. With the massive upcoming wave of baby boomers, the demand for senior living will be a major focus for investors that partner with the right operators and strategies.

With the COVID-19 pandemic, there is a risk that senior living accommodation may be underfunded or neglected due to funds being prioritised for other human needs.[7] The McFarlin Group is a specialised Dallas-based firm that focuses on senior living accommodation and has launched a $100 million fund to purchase these types of assets due to the high need for facilities like this in the future.[8]

As the demand for this type of accommodation continues to rise, and investor interest increases, the MacFarlin Group is hoping to position their company to take advantage of the high demand, while investing in senior living accommodation and upgrading the facilities they acquire.[9] This creates a win-win situation for baby boomers looking for appropriate senior living accommodation and investors looking to invest in the real estate market.

[1] Jones, L. (December 2020). ‘The first baby boomer is turning 75. Okay Boomers?’. Retrieved from U.S. 1.
[2] (November 2020). ‘The future of senior living’. Retrieved from eCornell.
[3] Jones, L. (December 2020). ‘The first baby boomer is turning 75. Okay Boomers?’. Retrieved from U.S. 1.
[4] (November 2020). ‘The future of senior living’. Retrieved from eCornell.
[5] Committee on Guidance for Establishing Crisis Standards of Care for Use in Disaster Situations, Institute of Medicine (March 2012). ‘Crisis standards of care: A systems framework for catastrophic disaster response’. Retrieved from NCBI.
[6]  Pearson, F. et al. (April, 2019). ‘The forgotten middle: Many middle-income seniors will have insufficient resources for housing and health care’. Retrieved from Health Affairs.
[7] Sudo, C. (April 2020). ‘McFarlin Group raising $100m fund to target Covid-19 distressed senior housing’. Retrieved from Senior Housing News.
[8] Sudo, C. (April 2020). ‘McFarlin Group raising $100m fund to target Covid-19 distressed senior housing’. Retrieved from Senior Housing News.
[9] Sudo, C. (April 2020). ‘McFarlin Group raising $100m fund to target Covid-19 distressed senior housing’. Retrieved from Senior Housing News.

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The latest Coronavirus Scenarios: Walking the Tightrope

Real Estate /

At the beginning of March this year, I wrote an article painting three coronavirus scenarios for the world at large over the foreseeable future: “Much Ado About Nothing”, “The Camel’s Straw” and “Spain Again”.

At the time, the number of global infections caused by the virus was 100 000 and deaths 3 000. Today the respective figures are 2 400 000 and 165 000.

So, looking towards the remainder of this year and into the next one, which scenario is likely to play out in reality? In answering this question, I will add one further scenario which I call “Tightrope”. As you will see, it is a challenging alternative but these are unprecedented times.

Much Ado About Nothing

All the medical flags which have gone up over the last month indicate that this scenario can almost certainly be discarded as a way of interpreting the past and the future of the pandemic.

The rise in the number of deaths by a factor of 55 in such a short period, and the fact that the public health systems of some of the richest nations on Earth have been completely overwhelmed, indicate the sheer scale and suddenness of the current disease.

To suggest that it is just another form of seasonal flu or that, left to itself, it will disappear like the outbreak of SARS and MERS before doing too much damage to humanity seems bizarre. Yet, there are still people who believe in this narrative and say that governments should never have strayed from a policy of business as usual in the economy. Some of the recent demonstrations against stay-at-home orders in America reveal the depth of this belief.

By contrast, I think the coronavirus is changing the game as we speak and will have a long-term impact on many aspects of our existence. It may force us to reconsider our profligate lifestyle and make us more aware of the inequities across society.

In particular, it will drive those in power to acknowledge that doctors, nurses and other health professionals deserve as much protection as soldiers being sent into battle.

The fact is that an unseen virus can stir up as much mayhem as a group of terrorists armed with a nuclear weapon. Having an adequate defense system to protect the nation against any external threat will acquire a wider meaning than just the possession of military prowess.

In other words, we will have plenty to do about improving public health structures in the aftermath of this pandemic. Hopefully, we will be better prepared for the next lethal virus if it appears anytime soon.

The Camel’s Straw

We move on to The Camel’s Straw scenario. In it the coronavirus does not have to kill millions of people to be the straw that breaks the camel’s back.

The global economy was already vulnerable before the pandemic began, with slower economic growth in China and the ongoing trade spat between the two biggest economies in the world, America and China. All that was required, therefore, was a small disruption to make the global economy collapse like it did in the Great Depression of the 1930s.

In terms of disruption, reality so far has been far more shocking. Witness the scenes of major cities with deserted streets; small businesses, restaurants and shops reliant on daily cash flows being completely closed down; operations of large businesses put on care and maintenance; no sports events or other mass gatherings; empty churches, schools and universities; multiple deaths in old age homes hit by the virus; and no international travel and tourism.

If I had posed this scenario in November last year, nobody would have believed it because it was unimaginable.

Obviously, there have been winners like all those companies involved in social media communication, virtual meetings and webinars. Many entrepreneurial minds have come up with ways to lift the spirits of those confined in homes with exercise routines and other entertainment options.

The food, medical, banking and other essential industries are operating as best they can. However, the vast majority of companies have seen their markets vanish overnight with workers being put on temporary leave or retrenched.

Unemployment figures are going through the roof at the same time as the realization is hitting home that lots of people live hand to mouth with little or no savings to see them through. Charitable institutions offering free meals will attest to the soaring demand for their services.

The global stock markets have gyrated wildly in the way I anticipated in my last article. March was on the whole a bad month for the markets; but the last fortnight saw a significant rise in share prices as investors took comfort in the record relief packages put forward by governments and central banks.

Other positive flags included the easing of the lockdown in China and the flattening of the curve of new infections in Europe, the UK and the US. The hope is that the worst of the pandemic will be over in the next month and the economy will soon be on its feet again and firing on all cylinders by the end of the year.

However, there are too many uncertainties around for any sane observer to reject The Camel’s Straw scenario at this stage. What will happen may well be different to what the market wants to happen. One cannot look at the future through a bubble of emotion.

For example, the virus may return with a vengeance in the event of a premature end to social distancing. Equally, nobody knows how many businesses may have been permanently destroyed in the last few months.

Above all, governments may be less solvent because of a decline in tax receipts at the very moment that they are taking on a huge amount of extra debt to finance their bailouts. A spectacular default somewhere has become a distinct possibility.

Liquidity may also become a concern to companies with too much gearing on their balance sheets. Similarly, individual consumers could experience difficulty in paying off credit card balances because they no longer have the salaries or wages to do so.

Spain Again

The third scenario of a repeat of the Spanish flu of the last century, which killed 3 to 5% of the world’s population, will remain in play until a vaccine is found. As already indicated, the coronavirus is unlikely just to melt away even with prolonged restrictions on human movement.

Meanwhile, some aspects of the virus remain shrouded in mystery such as the number of asymptomatic cases; whether there are long-term side effects for those who have recovered from the infection; and whether they will be immune from being infected again. Estimates of the actual infection rate and death rate still vary a lot through lack of comprehensive data.

With the world’s greatest experts focused on discovering a vaccine and proving it in a series of trials, the time to get it on the market is thought to be a year to eighteen months. Until then, the nightmare scenario of a runaway pandemic should serve as a warning to all those leaders and policy makers who want to dismantle the current measures of containment too soon.

Tightrope

My closing advice at the end of my previous article was that humankind must become more cooperative to ensure that the virus did not have the last word. We needed to create the feeling of a shared destiny on this planet.

Alas, despite some wonderful examples of international assistance with critical items of medical equipment being sent to places where they are most needed, we still live in a world of enclaves, rising nationalism and leaders pursuing their own agenda.

If anything, the virus has fueled an even greater desire by countries to become more inward-looking and self-sufficient. Yet, the only way out of the mess is a shared strategy to rid the world of an enemy that knows no borders. Every nation has to learn from each other.

Hence, I am introducing the Tightrope scenario which is all about a delicate balancing act between preserving lives and livelihoods. The most important decision for any country to make is when and how to lift the restrictions in place by balancing the best medical models on the potential evolution of the pandemic against the need to revive the economy.

This is not easy to do. Implementation has to be a step-by-step process; and there will be wobbles along the way.

Furthermore, given that the spread of the virus has been uneven, different parts of a country may need different approaches and time lines. One shoe does not fit all and any sign of resurgent clusters must be nipped in the bud with swift testing and fresh quarantine measures if necessary. The elderly may need special protection too.

As life begins to attain a new normal – it will never return to the old one – it will be up to businesses, families and individuals to walk the same tightrope in their daily activities. Judgements on what constitutes sensible social distancing measures will be at the heart of everything we do until an effective vaccine is discovered and universally distributed.

There is a growing consensus among governments around the world that the acrobatic journey described in the fourth scenario should begin as soon as is reasonably possible. China, Austria and Denmark have already ventured forth on the rope. New Zealand will start next week and others will follow later in the year.

Will we thus avoid the pitfalls of slipping into The Camel’s Straw and Spain Again scenarios on either side of the rope? I sincerely hope so but these are early days. We have plenty of surprises in store. But of one thing you can be sure: adaptation is the key to survival.

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