Russ Whitney approaches how managers invest in land

Russ Whitney approaches how managers invest in land

Real assets of all kinds says Russ Whitney, including land, have performed well, years after the financial crisis. But managers of these assets need to know their category.

Real asset managers are different from financial brokers in many regards claims Russ Whitney. Chief among them are how they understand the assets themselves, beyond performance metrics. A real asset manager who works in land investments is perhaps the best example of this distinction.

Russ Whitney guides investing in any form comes with a balance of risks and rewards. But those risks can be mitigated with a balanced portfolio – involving land and more traditional equities, bonds, real estate and such. The input of an independent financial advisor can help identify the right balance.

For investors, this might reassure the degree of interest in land and property. Russ Whitney conveys, land investments retain an attraction to investors for several reasons:

1.Land assets outperformed securities – The world equity index generated an annualized return of only 0.1 per cent. Bonds did better, with an annualized return of 6.1 per cent, benefiting from a low-interest rate environment that could change soon. Real assets including land can and often do perform much higher.

2.Land assets are hedges against inflation – Real assets, including land, tend to rise in value with inflation. Considering Russ Whitney’s real estate land investments, which prepares and converts raw land adding into housing-ready developments, the demand for housing and price increases that outpace inflation.

3.Land assets are non-correlative to financial markets – Land itself lost little value in the financial crisis while the financial markets were in a tailspin.But to be clear, working in land investments comes with requirements:

4.Requires specialized skills – the predispositions of planning authorities, home site design and infrastructure. It’s far from a market security buy-sell scenario – and it rewards strategic and creative thinking.

Russ Whitney’s-Tips for getting best real estate investment

Russ Whitney's-Tips for getting best real estate investment

Russ Whitney prefers to categorize real estate as an investment that includes residential and commercial properties as well as mortgage-based securities and real estate investment trusts. For most real estate investors, these investments are characterized as income-generating properties that see revenue from rent earned and capital appreciation from the increase in market value. All this investment flow depends on the net operating income (NOI), maximizing cash flow is key to a successful real estate investment.

Property Valuation

To fully understand the importance of cash flow to real estate investment, Russ Whitney suggests that it is necessary to know that the value of the property is directly linked to the NOI. As,NOI is calculated after expenses and both property value and return on investment are depended on NOI, hence it is important to maximize income and minimize expense.

The Risk/Return Profile

Commercial real estate increases in value based on two components says Russ Whitney. The first is capital appreciation from the increase in the market. As properties sell at higher prices, the value of the commercial asset increases. There is very little that an investor can do to mitigate the risk of market increase or decrease.

The other component is the cash flow from income. Revenue is something the property owner has a large amount of control over and which the risk and return balance can be finely tuned.

Arbitrage Opportunities

Russ Whitney prefers getting a good deal is the foundation of any real estate investment. A low investment amount and high revenue make for a good return on investment. Bank-owned and government-owned homes often offer properties at amounts under market value.

A knowledgeable real estate agent with expertise in the form of alternative investment makes it easier to identify opportunities for high returns. For active investors, a real estate analysis seminar helps maximize their investment.

Important Correlations

For an alternative investment, Russ Whitney insists real estate is historically correlated to the stock market, making it a good investment to diversify a portfolio. During times of stock market loss, real estate continues to offer returns. Real estate is positively correlated to inflation, that generally increases in value as inflation increases. This makes real estate a good inflation hedge.