When you should step out of your real estate funds pool is the most important thing to know before making a financial move. However, in a market in which millennials are often the main focus, selling funds can be quite challenging. Furthermore, market fluctuations can leave you looking at your real estate funds with disdain. While your considerations might be true, some situations work to your advantage.
According to one certified financial planner, the only time to sell funds is when you need liquidity and you have already planned your next strategy: “Any reaction to a geopolitical event or any kind of decline in the market does not indicate the right time to sell your funds.” If you want to sell your real estate funds to high net worth (HNW) millennials, adopting a strategic approach is of utmost importance.
Before delving into the process of selling your real estate funds, knowing the existing financial position of HNW millennials will give you the insight to tailor your selling strategies accordingly. After tracking a significant number of rich families living in the United States, a Spectrem survey reportedly revealed that millennials make up the largest share of $25 million-plus investors, accounting for 47% of all the U.S. investors. Another market study by Deloitte found that the average net worth of millennials is 34% lower than it was for the corresponding age group in 1996.
Considering the stats, it is likely that millennials will be looking for investing in real estate funds with high expectations. While real estate funds make great additions to an investment portfolio, emphasizing their benefits and offering customized service can be helpful in selling out your funds. Let’s dig a little deeper to figure out how to sell your real estate funds to HNW millennials.
1. Highlight The Benefits Of Portfolio Diversification
Emphasizing the benefits of buying real estate funds is the best way to attract millennials. Create your marketing strategy that shows potential funds buyers their benefits; show them how much diversification these funds offer. Explain that it not only saves millennials from catastrophic losses, but also protects them during economic turmoil, as their total investment will be spread over different assets.
In general, creating a diversified portfolio requires investing in a vast range of securities from different industries. In addition to that, the self-managed and sufficiently diversified portfolio requires immense investment of capital and research time. Since real estate funds are a type of mutual fund, they offer investors automatic diversification, allowing them to pick a mix of high-reward securities along with stable growth assets.
2. Customization Is Key
As mentioned, selling your real estate funds to millennials is not easy. You must offer customized services that meet the specific needs of young high net worth millennials. Not to mention, the young people of this era have complex requirements, and they expect more value. Therefore, you will need to expand beyond the first-tier services and offer second- and third-tier services to them. These services can include lending and credit services. This is just the gist of what high net worth millennials expect and require.
Keep in mind that you are targeting investors in their twenties and thirties. They usually desire nontraditional assets, and this is the point you can leverage to sell your real estate funds. Assessing the risk tolerances and specific investment goals of high net worth millennials will help you further in selling the funds.
3. Elaborate On ‘Hassle-Free’ Investing Options
Not all millennial investors have realized the hassle that comes with concrete investment. From tax payments, tenant attraction and rentals to property management, repairs and maintenance, investors need to tackle a great deal of affairs when making a traditional real estate investment. But investing in real estate funds does not put them into a fuss. All they need to do is invest a certain amount, sit back and gain profits from their investment in the form of dividends.
Most millennials I observe prefer concrete investments, which underscores their desire for homeownership. Apparently, the tangible nature of investing in conventional real estate provides them more comfort. However, we know and should be able to demonstrate that these investment options are not necessarily the easiest and best ways to build wealth.
4. Draw Attention To Investing In Stock
A survey of over 1,000 Americans revealed that more than 30% of Americans consider real estate the best way to invest their money as a long-term strategy. This is especially true about millennials, those in the 23-to-38 age group. The report shows that millennials are more interested in investing in real estate than the stock market and are in fact least likely to put their money into the stock market, despite the bull market that has spanned the last 10 years.
Data tells us that 22% of millennial Americans stay at their parents’ homes. Student loan debt, stagnant wages, rising rents and an unaffordable housing market are some of the major factors that keep young people at home. At this point, these people are seeking long-term investment options to secure their future. This can be a favorable situation for you if you can explain how real estate funds can serve as lucrative investments.
Conclusion
While these are just some insights that will give you a clear picture of how to sell real estate funds, making the right and successful decision requires thorough research. Once you have thoughtfully designed and structured your real estate fund selling strategy, then comes the time to market it to potential high net worth millennials. In doing so, you will need to adopt discrete and strategic stages, which will include:
• Identifying your target investors.
• Finding the sponsor or anchor investor.
• Determining the placement of the agent.
• Establishing an operational platform.
• Preparing and aligning marketing materials.
It is worth mentioning that millennials are striving for incredible investment options, which will continue to develop their interest in investing in real estate funds.