Beat Inflation: 4 Inflation-Proof Investing Strategies Millionaires Are Using Right Now
Mar 11, 2024
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Real estate investor Darin Davis shares insights on preferred equity, a lucrative play for today's market. Learn about passive income, property discounts, and beginner-friendly opportunities. Dive into the world of private equity investments with wisdom from a seasoned pro. Get ready to make educated decisions and secure your slice of the real estate pie!
Preferred equity offers secure investment opportunities with quarterly payments and superior security.
Investors can expect annual returns of 10-12% from preferred equity deals, providing steady cash flow.
Thorough underwriting of preferred equity deals allows investors to acquire assets at discounts, enhancing potential returns.
Deep dives
Preferred Equity: A Safe and Profitable Investment Strategy
Preferred equity serves as a valuable tool for developers needing additional capital to complete projects. Considered as rescue capital, preferred equity offers compelling characteristics for investors. Developers typically utilize preferred equity to bridge financing gaps due to reduced leverage, higher interest rates, and declining valuations in the real estate market.
Safety in Preferred Equity Investments
Preferred equity investments provide a secure position in the capital stack, ensuring priority to interest, penalties, and capital before common equity. Investors can expect annualized returns ranging from 10% to 12% with immediate quarterly payments, leading to steady cash flow. With short-term options that span two to three years, preferred equity deals offer a favorable risk-reward ratio.
Trojan Horse Strategy in Preferred Equity Deals
Underwriting of preferred equity deals mirrors common equity practices, emphasizing thorough analysis to ensure asset viability. In the event of non-performance, investors may acquire assets below replacement cost, presenting lucrative opportunities for enhanced returns. The Trojan horse concept enables a detailed examination of assets before acquisition, promoting informed investment decisions.
Communication and Transparency in Investment Partnerships
Establishing clear communication channels and fostering transparency with investment partners are crucial for successful collaboration. Sponsors should provide regular updates and address challenges promptly to maintain trust and mitigate uncertainties. Effective communication strategies enhance investor confidence and foster long-term relationships based on mutual understanding.
Strategic Mindset and Execution in Real Estate Investing
Adopting a strategic mindset focused on comprehensive due diligence, exit strategies, and continuous learning is imperative for real estate investors. Anticipating market shifts, planning for contingencies, and partnering with experienced sponsors contribute to successful investment outcomes. Proactive decision-making and a long-term perspective are key to navigating the dynamic real estate landscape.
Mike has an absolute barn burner of an episode for you today. This one is so stinkin’ valuable that he can guarantee it’ll light a fire under you.
He sat down with Darin Davis, who's one of the savviest real estate investors Mike knows. Darin has survived multiple boom and bust cycles while consistently banking profits – all while guiding investors to safety and passive income.
In this episode, Darin reveals a special real estate play that is perfectly positioned for today's market conditions. It's called "preferred equity" and it could be your golden ticket over the next 2-3 years:
✅ Passive income with quarterly payments ✅ Superior security to common equity investments ✅ Potential to acquire properties at steep discounts ✅ Ideal for newbies and experienced investors alike
Darin explains it all in a way that only he can – complete with visceral metaphors, straight talk, and tons of wisdom from decades in the trenches.
Make sure you listen to the end because Darin put together some special resources to help you get educated on preferred equity. He delivered in a big way with guides, videos, webinars, and more.
Stop sitting on the sidelines wishing you had a piece of the real estate pie. This is your chance to get some skin in the game with way less risk than most plays out there.
Listen to the full episode—then hook yourself up with Darin's free resources while you're at it and get ready to have your mind blown!
Key Takeaways
(00:00) Market offers clear opportunities with preferred equity.