Investing in the Multifamily Real Estate Sector
Historically, other asset classes, such as equities, have generated higher returns than real estate, although these returns are coupled with higher risk and volatility. When asset class returns relative to the level of risk are calculated over an extended period of time and measured in terms of volatility (or standard deviation), it becomes apparent that real estate produces competitive absolute returns when compared to stocks and bonds. Also clear is the superior risk adjusted return delivered by real estate in comparison to equities.
Compared to bonds, private real estate delivers a higher return with the same level of risk. Historically, private real estate has exhibited significantly lower volatility combined with high absolute and risk adjusted returns. The advent of COVID-19, the long term effects of the lockdown on markets in San Francisco and Los Angeles, and artificially lower economic occupancy on a systemwide level have created an attractive short term window for purchasing assets, combined with the prospective economic recovery spurred by vaccine distribution offer a compelling reason to invest in commercial real estate.
Few investment opportunities provide superior return potential with mitigated loss risk via real estate securitization. By securing investors with the real estate assets of the project, Mission Capital Fund I, LLC seeks to provide principal capital loss protection to investors to the maximum extent that is available.
The Management Team’s opinion is that Q4 2020 through Q2 2021 is a window for depressed asset purchase price and long-term growth potential, since “a vaccine, and better treatments – once distributed – will have confidence roaring back.” (HousingWire: “What the Surge in COVID cases means for the housing market this winter,” November 16, 2020).
A COVID-induced recession and economic aftershocks have created opportunities to purchase, rehabilitate, and re-position distressed and below market properties located in desirable multi-family geographic areas with strong internal fundamentals.
Our management team has identified communities in California that are seeing fundamental shifts in population, opening potential for operational repositioning long term growth. Additionally, the economic climate has led to overleveraged property ownership in the multifamily sector.