Since the worldwide pandemic hit in March of 2020, multifamily investors have been monitoring all types of trends and opinions in order to help determine their investment strategy during COVID. Some experts predicted that multifamily properties would drop in value due to high unemployment and skyrocketing vacancy levels. Others stated that rents would decrease, and income would suffer as millions of tenants lost their jobs.
Fortunately, those negative predictions never materialized. Multifamily property prices held steady, as did occupancy rates. In many areas, rents actually increased rather than declined. In our Atlanta area properties, for example, we saw rent increases of 20% to 30% and higher. One of the trends that some investors followed were those of family offices. There are more than 3,000 family offices around the world, and they have more resources than the average high net worth individual investor; from dedicated investment teams, to access to top-notch data bases, and vast experience in investing in multiple downturns. Learning about how they behave and invest today can be invaluable to investors.
Looking at family offices and the resources and employees they have in place it’s no surprise that many investors follow their investment strategies. After all, they were able to amass an enormous amount of wealth, so they do know what they’re doing when it comes to investing and managing money.
Family Offices: A Closer Look
A family office is basically a wealth management firm that typically manages money and investments for only one wealthy family. Each one generally invests a minimum of $100M across real estate, stocks, angel investments, and others. Their investments are based on the way they allocate the funds for investments, and according to Fintrx 80% of family offices make direct investments. Since 2010 this trend has grown over 200%.
What makes following the investment trends of family offices worthwhile is that they have a lot of resources and teams in place that are able to analyze the different investment opportunities that come their way. Once investment opportunities are vetted, the teams provide advice to the owners of family offices. It’s quite similar to angel investors who like to invest alongside a venture capitalist who also has the resources to vet various angel investment opportunities, as well as high-net-worth individuals who invest alongside an experienced real estate syndicator in order to tap into their resources and expertise.
There’s an old saying that, “If you want to create wealth, learn from those who have done it before and take advice from those who have been successful.” That’s what many passive investors are doing by following the trends of family offices, venture capital firms, and successful real estate syndicators.
Family offices control trillions of dollars in assets and enjoy a unique relationship with the families that they serve. According to Campden Research, family offices control $5.9 trillion in assets, with more than 42% of those family offices located in North America. They have forged very personal relationships with family members over the years that they’ve worked together, and not only understand the family’s succession plans but also understand the family’s dynamics.
Family Offices Diversify Across Industries