How Investors Might Weather Future Storms

Understandably, anxious investors seeing the impact of Florence and anticipating that the hurricane season is far from done might be wary of weathering future storms. But here are some reassuring words from a CEO of a REIT with extensive experience in apartments, senior and student housing.

“Just because a property is in a hurricane-prone area does not mean that it is not a good investment. What is most important is that investors need to ensure that they are working with a sponsor who has done their homework and has all of the proper insurance in place,” Yuen Yung, CEO of Upside Avenue, tells GlobeSt.com.

Upside Avenue is a new product offering from Casoro Capital, an established investment firm that has completed more than $1 billion in real estate transactions during the past 15 years. The new platform offers a diversified fund of real estate for smaller users for as little as $2,000.

During hurricanes such as Florence, usually the supply of real estate shrinks, even if temporarily. The displacement creates a shortage of supply while demand is still the same. “As an investor of real estate, you want to be sure to protect yourself ahead of time with insurance that not only protects the physical property but also the loss of income. This needs to be in place before the incident and part of the cost of investing. You also need to make sure that your staff has a plan in place for residents,” suggests Yung in his investment advice.

Other Investment Factors

While physical hurricanes are one aspect for investors to consider, it is just not inclement weather that people need to take heed of when considering their options, he adds. Nearly all of the leading economists are ringing alarm bells about the state of the stock market. The residential housing market is also showing signs of a slow-down with many experts discussing a housing bubble.

“When markets are turbulent we focus on long term demographics and positive population growth,” he says. “We also look to markets with positive job and population growth, where assets are below replacement cost. Like people fleeing from a pending hurricane, we do have headed away from expensive overpriced coastal markets, to sunbelt regions of the country.”

Technological innovations are also making high quality deals more accessible to the type of smaller investors sought by Upside.

In the past, only accredited investors were legally able to diversify their investment portfolios into alternative assets like multifamily, senior living and student housing real estate. But administrative costs for each investor limited the amount of money taken in. Many smaller investors turned to the stock market.

“With the proliferation of financial technology, established investment firms with extensive track records like Black Rock, Carlyle Group and Casoro Capital have launched platforms like Upside Avenue which open up the opportunity to invest in physical assets to all investors for as little as $2,000. This is enabling all investors to gain access to real physical assets in their portfolios which can provide a hedge to weather future storms,” says Yung.