Top 5 Strategies Shalwin Properties Uses to Reduce the Risk on your investment
Did you know that hard assets are typically less risky investments than paper ones? They are tangible or physical items that an individual can own.
Real estate is a hard asset, as opposed to stocks which are paper assets.
As I became more financially educated, I have realized that not losing money and protecting the downside is more important to my financial growth than unpredictable upside. This is one of the many reasons that I’ve gravitated towards real estate and have shifted the majority of my portfolio to hard assets.
Hard assets are NOT risk free, neither is real estate. That’s why it’s important to consider what risk mitigation strategies the sponsorship team is using to protect your investment.
When investing with a sponsorship team, it’s important to know that sponsors can and will implement risk mitigation strategies, which can dramatically reduce the already reduced risk associated with real estate investing.
What does that mean when we’re talking apartment investing?
Here are Top 5 strategies that Shalwin Properties uses to mitigate risk on our investments.
♔ Interest rate cap purchase: this acts like an insurance policy for interest rate variability on floating rate debt in a rising interest rate environment.
♔ Interest Reserves: this is where the sponsorship team holds funds from investments and reserves it for interest rate fluctuations to cover the monthly debt service or unexpected capital needs. If the reserve is not utilized, it will be distributed back to investors.
♔ Market selection: we choose growing markets with population in migration and increasing, diverse job opportunities
♔ Conservative underwriting: you probably hear this one a lot, but what does it mean? That’s when the various data reports are predicting rent growth or occupancy numbers, we don’t use those numbers in our predictive financial models, we use lower numbers
♔ Insurance (property and business interruption): if a catastrophe occurs (ie fire, hurricane, hail storm), not only is the physical property damage covered and any displaced tenants taken care of, but also the business loss from of income is also reimbursed by the insurance company.
Your money is safest when it’s invested in real estate
It’s not safe in your savings account…
It’s not safe in your retirement account…
It’s not safe in your stock account…
It’s not safe in cryptocurrency….
but it is SAFE in apartments.