While an “investor relations” title may be obscure, the role is quite common, especially in larger or burgeoning companies, that need to foster (expedite) growth. The roles and responsibilities of an investor relations department can vary greatly.
Real estate development requires time and financial resources. Projects can take years before a shovel is even in the ground. Often, these soft costs will be rolled into the project and absorbed by the developer until the project is complete, which limits capital.
In the past, real estate developers could retain 100% financing for their projects. Those days are long gone, so equity capital is needed to ensure success. As a result, real estate syndication has become prevalent, whereby developers will bring on limited partners (passive investors) with accredited financials as a source of capital.
The passive investors provide the required capital to secure financing for a specific project, which can often allow the developer to pursue multiple or larger projects simultaneously. Typically, the passive investors are investing money into the real estate deal, however they do not partake in the management or operation of the property.
Real estate, above most other forms of investments, is an attractive investment for three main reasons.
- Diversification of investment portfolio strategy as a supplement to traditional investment vehicles such as stocks, bonds, mutual funds, etc.
- Passive income with minimal involvement of time or human capital allowing more free time for hobbies and passion projects.
- Provides a steady stream of income that can be used for additional investment opportunities, retirement, or estate planning.
Globally, the private equity real estate class is valued at over $4 trillion and continues to grow in popularity. If you have not yet considered passive investing as one of your investment strategies, I encourage you to do some research and speak with your financial advisor as you pursue financial health and independence.
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