Seek Favorable Long-Term Economics

In order to create legacy wealth, you need to build a portfolio of assets and hold onto them over long periods of time. To that end, we want to focus on niches with favorable long-term economics. This means investing in a niche where the demand grows at a higher rate than the new supply coming online. These favorable long-term economics will serve as a tailwind helping contribute to outsized investment returns over time.

Buy Recession-Resistant Assets

Capital protection is key to building legacy wealth. Focusing on recession-resistant assets allows us to protect the downside risk. When the economy is going well, the rising tide lifts all boats. Nearly every asset class performs well when the times are good, but how does an asset class perform during a downturn? We want to ensure that we’re protecting the downside risk. Folks that are investing with us are accredited investors. They’re sophisticated folks who have already built some wealth.

They’re not going to be investing with the last dollar that they have to live on, and you only need to get rich once. Once you have some cash, your first priority should be to protect the downside. We subscribe to Warren Buffett’s famous two rules of investing: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” So, protect the downside and ensure that even when the economy sputters you will be able to hold on to your asset until the next recovery surfaces.

Find a Fragmented Niche

Simply put – we like asset classes where institutional capital hasn’t yet consolidated the space. In a fragmented niche, we are often able to acquire assets from smaller ‘mom-and-pop’ owners who may be less sophisticated than institutional players. When institutional capital has flooded the market, it is more difficult to buy great deals. In a fragmented, imperfect marketplace, where we’re working directly with that ‘mom-and-pop’ owner, oftentimes we can buy that deal with a nice margin of safety right at acquisition.

Demand a Margin a Safety

Embracing Warren Buffett’s wisdom, we prioritize buying properties with a significant margin of safety. This approach involves acquiring assets for less than their current market value, thereby ensuring a buffer against unforeseen market fluctuations or operational challenges. In doing so, we not only capitalize on immediate equity gains but also safeguard our investments against downturns. This strategy is critical for mitigating risk and enhancing the potential for sustainable, long-term returns. 

In every transaction, our team conducts rigorous due diligence to accurately assess the true market value of a property, taking into account factors such as location, operational efficiency, and future growth prospects. Our disciplined approach ensures that we only proceed with acquisitions that offer a substantial margin of safety, aligning with our commitment to capital preservation and the attainment of superior risk-adjusted returns for our investors. This principle of buying with a margin of safety is a cornerstone of our investment philosophy, reflecting our dedication to prudent, value-driven decision-making in the pursuit of helping our partners build legacy wealth.

Invest for Cash Flow & Legacy Wealth

We invest for cash flow and legacy wealth. To avoid outsized risk, we only acquire assets which have positive cash flow in place from day one. We do not attempt to time the market. Opportunistic developers with myopic, short-term business models and syndicators who promote heavy value-add transactions eventually mistime the market, and their mistakes cost investors dearly. See Rule No: 1, above. To that end, our acquisitions must have positive cash flow and the opportunity to create legacy wealth.

Real wealth grows over time through efficient management of capital, buying right, and investing for the long term. For that reason, once we have acquired a great cash-flowing asset with appealing long-term economics, our favorite hold period is forever. This investment strategy allows us to build a portfolio of assets which generates cash flow and builds legacy wealth for our families.

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