Ajay Gupta, CEO of Gupta Wealth Management, has revealed during his interview with The Street that, according to the United States Census Bureau, 40 million Americans have passed the traditional retirement age at present. These figures are expected to double in the coming decades, and Gupta said that these people will need a place to stay and live but the supply has not kept up.
Gupta also states that there is a steady increase in occupancy and rents, but there's a limited supply of new inventory due to a severe contraction in construction lending caused by the credit crisis. This is the reason why he is more in favor of more stable, higher-quality, and long-term investments, such as privately owned apartment buildings or assisted-living facilities, than the highly leveraged development deals.
"I also look for opportunities that allow my clients to co-invest alongside some of the biggest family offices and senior housing operators in the country," added Gupta. "Becoming a minority investor in these real estate portfolios allows our clients to take advantage of the deep pockets, expertise and scalability of those already in the space."
Benefits of investing in real estate include tax deferral, the 1031 exchange potential, and the depreciation of rental income. Gupta also shared that his clients generate a yield of approximately seven percent in these investments.
Gupta cleared out that investing in Private Real Estate is not for everyone. Private Real Estate Investment does not yield money quickly, unlike buying a publicly-traded Real Estate Investment Trust or REIT.
For those who want to have their money back fast, Gupta advised that the REIT is still the better choice over the Private Real Estate Investment.
"The primary problem with REITs is that they offer a less attractive rate of return while doing nothing to temper stock market volatility, but for some clients, the liquidity factor is a reasonable trade-off for taking on additional risk," said Gupta.
