James Stepanian And Summerlin Asset Management: Are Development Investments Right For Your Money?

Interested In A Little Diversity?

If you’re like most investors, your portfolio is heavily geared toward traditional stocks and bonds like mutual funds, treasuries, and others.  But, like many in this environment, you may also have realized that carrying diversity in your portfolio is an important hedge against inflation or the fluctuations of the stock market.  What’s the best hedge? For many, the answer is something that is less tied to fluctuation than typical capital market investing: real estate.

What To Look For In An Investment

Real estate can be more difficult for the average person to evaluate, however, especially if the investor is used to dealing with stocks and bonds.  Ideally, you’ll have someone like James Stepanian and the asset management firm he heads, Summerlin, to help you examine any real estate investments that present themselves.  But sometimes it’s nice to know, in general, what criteria to use when trying to decide between options. If you’re interested in a ground-up development investment, here are a few things to consider:

1. Lien Position

How many other cooks are in this kitchen?  It’s important to know who gets paid first in the event that something goes wrong.  If you’re not in the first lien position and the borrower has to be foreclosed upon, you could be waiting a long time to see your money.

2. Track Record Of The Borrower

How experienced is your borrower?  What other projects have they completed, and are their projects successful?  Do they have a history of unpaid bills and lawsuits? (If you feel like this would be a difficult thing to asses by yourself, you’re right: this is why it’s so important to have an asset management company with the experience and tools to do this efficiently.)

3. Location

Is your development project in an established urban market--where the value of the land will likely stay stable--or in an unproven, rural area?  Location can make or break the value of your investment, so it’s worth investigating. Again, this is something that can be difficult for the average investor to assess on their own.

Invest Smart: Bring Help

While real estate investments can bring much-needed diversity and stability to your portfolio, most investors are busy people who lack the time and expertise to evaluate them carefully.  With so much money at stake, it’s vital to have able professionals on your side. That’s why we at Summerlin want you to be smart and informed about your choices.

Sources:

Portfolio  - www.summerlinam.com

What To Look For In Ground-Up Real Estate Investment - www.medium.com