Real estate has long been recognized as a foundational asset class for building and preserving wealth.
In fact, one famous statistic (often attributed to Andrew Carnegie) notes that about 90% of millionaires made their fortune, at least in part, through real estate.
While that figure is a bit anecdotal, it underscores an important point: investing in properties can be a powerful wealth generator. Unlike stocks or bonds, real estate investments are tangible – you’re buying an actual physical asset, whether it’s an apartment building, a self-storage facility, or a warehouse. This tangibility often provides a sense of security; land and buildings have intrinsic value and useful purpose, which tends not to vanish overnight.
From an investment standpoint, real estate offers a combination of income and growth. Income comes from rent paid by tenants – a stream of cash flow that, in well-chosen investments, can be steady and even grow over time. Growth (or appreciation) occurs as the property value increases. This can happen through market dynamics (e.g., a growing city pushing property prices up) or through active improvements (renovating a property to make it more valuable). Over the long term, real estate values in many regions have trended upward, supporting the idea that holding property can build wealth over time. Additionally, there are tax advantages (such as depreciation deductions and 1031 exchanges in the U.S.) that can enhance after-tax returns for real estate investors, making the asset class even more attractive.
Diversification
Another key feature of real estate is its role in diversification. Real estate often behaves differently than stocks and bonds. For example, property values are influenced by local supply and demand, and rental incomes might remain stable even during stock market volatility. Many investors include real estate in their portfolios to reduce overall risk – the idea being that even if the stock market dips, their real estate holdings might hold value or continue generating income. Real estate has also shown an ability to act as an inflation hedge. Rents and property values tend to rise when the cost of living rises, meaning real estate can help preserve purchasing power. Historical data supports this: across numerous 5-year periods since the 1980s, real estate investments have outpaced inflation roughly 85% of the time (avisonyoung.com). This is not to say real estate never struggles (it can, especially in short-term downturns), but over longer horizons it has a strong record of keeping up with or beating inflation.
Falcon Capital approaches real estate investing with this big picture in mind.
Our updated investment strategy is built on the premise that carefully selected real estate assets can deliver attractive, risk-adjusted returns while providing downside protection through real, hard assets. In the following sections, we’ll delve into specific segments of real estate (multifamily, self-storage, and industrial) that we focus on, as well as the structures through which we invest (such as funds and syndications). Each section will provide deeper insights into why we believe these strategies make sense now, backed by industry trends and data. By understanding the rationale and numbers behind our approach, you’ll see how Falcon Capital positions itself as an expert guide in the real estate investment landscape, helping our partners navigate opportunities for income and growth.