In the vast landscape of real estate investment, commercial real estate stands out as a lucrative avenue for investors seeking robust returns and diversification. Understanding the nuances of various commercial real estate asset classes is essential for making informed investment decisions.

"Why should I invest in real estate when I can earn 5% in risk-free treasuries…and stay liquid to catch the bottom of the real estate market!"

I've heard this comment more than a few times this past year. I understand and respect that position. However, this is often short-sighted and can result in significant opportunity costs for investors hoping to beat inflation and build wealth.

“Where are all the great deals right now?”

As I write this in February 2024, I continue hearing this question in various forms from investors and online.

Many of us were investing in real estate through 2008. "Half-off” real estate deals were plentiful then. However, we’re not yet seeing any significant discounts.

In this article, I’m not going to give you a detailed list of every way you can save on taxes. 

I am going to encourage you to find someone who has that list and can tell you precisely what you need to do to save on taxes.

This discussion could lead to your most strategic move to preserve and create wealth by saving on what is likely your largest annual expense: taxes. 

He said it as an afterthought as I was leaving his office. But his observation left a deep impression on me.

Earlier in 2023, I met with one of our most experienced investors in California. In 2019, he and a few partners started a hedge fund that now manages around $7 billion. Before that, he and his partners were partners at one of the world’s most successful hedge funds. He made an interesting comment, and I’m paraphrasing and condensing our conversation...

As I write this article in July 2023, we’re seeing a lot of negative headlines about commercial real estate. For example, here's a July 7th, 2023 article from Business Insider:

“Commercial Real Estate Values Set to Crater as Much as 40% by 2025 in These 6 Cities”

Right now, the headlines do not reflect the facts, nor do they tell the whole story of what's happening.

As a fund manager focused on historically recession-resistant asset types, we have invested in mobile home parks, RV parks, self-storage, and more. When a trusted industry contact recommended we look into retail for our funds, we were a bit repulsed. What about the Amazon Effect? And the so-called Retail Apocalypse we have been hearing about on the news?

Wellings Capital and its affiliates have invested in commercial real estate, including mobile home parks and self-storage, for years.

We added preferred equity investments to our Wellings Real Estate Income Fund in 2023, and the preferred equity investments are providing meaningful risk-adjusted returns for our investors. Since there is a lot of jargon surrounding preferred equity, we had some investors ask us to more clearly define the terms.

Wellings Capital and its affiliates have been investing in commercial real estate, including mobile home parks and self-storage, for years. We added industrial real estate over the last several years, and this asset type is providing meaningful risk-adjusted returns for investors in three of our funds. This article explores our thoughts on this broad topic.

Wellings Capital just wrapped up our worst self-storage deal. We thought you might want to hear about the process and lessons learned along the way these past 3.5 years.

Spoiler alert…

Though it’s tempting to surprise readers at the end, I don’t want you to get to the conclusion of this article and feel tricked when you realize the deal finished successfully.

This is a big deal for me. It’s my third book on real estate investing. (Many of us got acquainted through my second book.) But it’s my first book released by a significant publisher. Or any publisher. (I self-published the first two.)

I’ve honestly been a bit disappointed in the timing of this book. I wrote the majority of it quite a while ago. But publishing delays from COVID and more pushed it back.

Remember those charts they showed you? How your $200k mortgage would cost you $555,555.55 to pay off over 30 years. Proving you should pay off your mortgage as soon as possible to beat the bank.

I’m here to tell you they are absolutely right.

If there’s no inflation.

There’s a different calculator to use in the case of inflation. And its effect is magnified in the case of high inflation.