Some Added Benefits…
While private real estate’s popularity is attributable both to its potential as a hedge against future inflation as well as its ability to deliver relatively high current yields, there are other benefits to private real estate as well. For starters, private real estate may provide yield with tax savings derived from depreciation allowances, and tax advantaged entities such as REITs, do not pay corporate income taxes as most public equities do.
For investors worried about both inflation and rising taxes, it may be worthwhile looking beyond the broader equity markets to real estate or similar, less liquid, current income-generating assets. If properly structured, they can potentially provide not only yield, but also needed tax advantages.
Randy Anderson, Ph.D. is President of Bluerock, a professional asset management firm in the alternative investment space. An investor and academic in the real estate industry for more than 20 years, Dr. Anderson is responsible for strategic management at Bluerock. He also serves as Portfolio Manager for the company’s recently-launched, Total Income Plus Fund of Funds.