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
Travis Watts