Best Core and Core Plus Investments of 2017-2018
Updated: Apr 22
The best of this almost impossible-to-find, but highly recommended and historically high-performing strategy.
(Disclaimer: I'm an investor and not a financial advisor or attorney. Consult your own financial and/or legal advisors before making any investment or legal decisions.) IMPORTANT COVID-19 UPDATE: this info was posted before anyone knew we would be facing a global pandemic in the spring of 2020. So it may be missingcrucial information necessary to making an effective investment today. Some of the information in it may be dated, no longer accurate and/or irrelevant. For information on analyzing investments in this new era, see: "How will Covid-19 / Coronavirus Affect my Alternative Investment Portfolio?"
Elusive core investments
There are four different investing strategies. Core and core plus are designed to generate the most consistent and reliable income with the lowest volatility and risk. To maximize safety, they're also the least leveraged of all the strategies. (Click here to learn all about the four different strategies.)
The typical real estate investment advisor recommends a significant amount of core/core plus in every investor portfolio:
Conservative/income focused investor: 80% (+/- 20%)
Moderate/balanced focused investor: 50% (+/- 20%)
Aggressive/appreciation focused investor: 10% (+/-10 %)
The problem is that core and core plus investments are MIA ("Missing in action") on 99% of crowdfunding platforms. This makes it very difficult to create a properly balanced portfolio. (One exception is 1031 crowdfunding, that is almost completely core. However, the high fee/commission structure is, in my opinion, too much for the average investor who isn’t looking to do a 1031 exchange).
Missing out on core/core plus is a big deal. A University of Chicago study found that from 1996-2016, these strategies outperformed value-added and opportunistic strategies on a risk-adjusted basis. (A major reason was the lower cost of leverage and lower fees).
So a portfolio without core/core plus is a portfolio that’s under-performing its potential, as well as taking on more risk than necessary.
“Show Me the Core!”
Institutional investors have plenty of core/core plus options. The problem is, most require a $5 million minimum investment (or more), which is out of the question for most accredited investors.
However, there are a handful of alternatives for us mere mortals. I’ve turned over every rock and stone to find them, and present them here. Part 1 of this article talks about the best core plus options. Part 2 talks about core options. Core Plus Funds
Blackstone Real Estate Income Trust (BREIT)
stREITWise: 1st stREIT Office
BlackRock US Core Property
RREEF Property Trust
USQ Core Real Estate Fund
The rest of this two-part article has an in-depth analysis of the above funds and is available to members of The Real Estate Crowdfunding Review private investor club. Membership is free but is restricted to investors who have no affiliation to any platform or sponsor (other than as a customer).