80 Million Net Worth Multi-Family Investor Buys…Muni Bonds?
I thought this was interesting and worth sharing. I have a personal mentor in my network worth approximately 80 million. He primarily invests in multi-family real estate; however, I recently discovered that he holds nearly 40% of his portfolio in tax-free municipal bonds. Upon learning this fact, my first thoughts was…why invest in an asset that yields 3% when you could invest in real estate and potentially have a much higher return? Then he explained the lesson. In summary, the lesson was about capital preservation, NOT potential equity upside or seeking the highest yield. In other words, this is a risk mitigation strategy for him.
After all… 32 million x 3% = $960,000 a year in tax-free income – Not bad
If you are reading this blog, you are probably a multi-family investor or have an interest in the asset class. Here are a few questions to ask yourself based on this lesson:
- How do you rank the importance of capital preservation (protection of your initial investment) when it comes to investing in multi-family?
- Do you diversify in any other asset classes?
- How do you evaluate risk vs potential return when making an investment?
To Your Success
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.