This article and podcast are sponsored by CityVest, providing investors with insider access to pre-screened, institutional real estate investments historically unavailable to individuals.
Alan, please tell us about your background.
My name is Alan Donenfeld, and I’m CEO and founder of CityVest. Over the past 40 years, I’ve invested billions of dollars in private equity, real estate, and other investments. I have served as president of several public companies, founded an SEC-registered/FINRA broker-dealer, and founded a top-performing hedge fund. Honestly, I have seen it all, and at this point in my career, I have learned how to “crack the code” to successful investing. Specifically, in the last couple of years, I began investing for family and friends using the same investing knowledge and methods used by successful institutional investors. I am now committed to working with individual investors, primarily physicians and CEOs, to help them protect and grow their wealth through investing in real estate. I do this through an online investment platform at CityVest.com that is easy and secure.
Why are you focused on real estate?
My goal with investing is to achieve the highest rates of return while being mindful of the investment’s level of risk. After 40 years of investing, I have found that only one investment meets those criteria: real estate. I’m not the only one that knows this. Over time, an overwhelming consensus has developed that real estate is the one investment that you should overweight in your portfolio for the long term. It is widely quoted that about 90 percent of the world’s millionaires have been created by investing in real estate. A groundbreaking paper published by the San Francisco Federal Reserve revealed that over the last 100 years, real estate not only provided the best returns of any asset class tracked, but it also did so with significantly less volatility. In a recent study by Cliffwater, an institutional investment consulting firm, over the past 20 years, real estate investments achieved a 53 percent higher return as compared to U.S. stocks. The TIGER21 investor group, for individuals with a minimum net worth of $10 million, has over 20 percent of their investment portfolios allocated to real estate. Given the simplistic demographic statistic that the U.S. population is growing by 2.3 million people per year and is targeted to reach 440 million people by 2050, it is easy to understand the steady growing demand pushing real estate valuations higher.
Naturally, the smart money follows returns, which is why private equity giants like Blackstone, Apollo, KKR, and Carlyle Group, which manage over $1 trillion, have expanded their real estate investment activities. Blackstone says they “invest in real estate with conviction through all market cycles and across the entire risk spectrum” and have a massive $341 billion invested in their global real estate portfolio.
Overall, institutional real estate private equity funds have dramatically outperformed all other methods of investing in real estate such as syndicated real estate deals, crowdfunding, and REITs because larger real estate funds have the best deal sourcing capabilities that enable them to identify and execute opportunistic acquisitions with speed and at the most attractive pricing. Syndicated deals, crowdfunded deals, small deal sponsors, and REITs just cannot compete with institutional investment funds. Unfortunately, institutional real estate private equity funds have been inaccessible to individuals due to their multi-million dollar minimum investment required. And the more experience a real estate manager is, the more capital they attract. I set out on a mission to change this.
What role does CityVest play with these institutional real estate investments?
CityVest provides individual investors with unique access to invest in top-performing institutional real estate private equity funds. Individuals can participate alongside the “one-percenters” in investing in top institutional real estate private equity funds through CityVest unique Access Funds for the first time ever. And we make these investments available through our easy and secure online investment platform at www.CityVest.com. CityVest is simply the best and smartest way to invest in real estate.
Please walk me through how CityVest got started.
My own journey investing in real estate started with a single condo purchase in the 1980s. Then a couple of 4-plexes. What a pain in the neck. That was not passive real estate investing – mortgages, renovations, and tenants. I tried a couple of syndications and crowdfunding investments, but they invariably performed poorly due to the deals being small, the fees were too high, and the sponsors were, well, less than honest.
My first real estate private equity fund investment was made around five years ago. After considerable due diligence, I found an institutional real estate fund with a great historical audited track record, an administrator, and experienced professional investment management. Given that the fund targeted institutional investors, the minimum investment required was prohibitively high. This was not surprising since top-performing institutional funds attract so much capital.
Unfortunately, the high minimum investment required by the best real estate funds was far more than I wanted to invest. So, my brother and I and a couple of friends aggregated our capital into our own feeder fund to meet the large minimum investment requirement. We pooled our capital, like a co-op, and formed our first Access Fund.
After the first couple of feeder funds or Access Funds, I made several improvements to the structure, making it even better. I knew that I wanted to build something that I wished others had built for me. The goal remained: Obtain higher returns with lower risk. It was clear to me that I had to invest alongside smart institutional investors and avoid being a part of a little retail crowdfunded syndication. I wanted to make sure that there was an audit and an administrator. And that the investments in which I participated were managed and supervised from start to finish by professional real estate investors.
Why do people say that CityVest is the best way to invest in real estate?
So, I created CityVest’s Access Fund as a way to access top real estate private equity funds. As our Access Fund investment amounts grew to $5 million per offering, we were able to negotiate better investment terms, such as a minimum 12% preferred return. Ever mindful of our goal of higher returns with lower risk, we have steadily improved our ability to find the best real estate private equity funds.
What is one of CityVest’s mottos?
Trust but verify. To maintain our high standards and reduce risk, CityVest requires a verified due diligence report on all of our real estate funds from a highly acclaimed independent due diligence firm, Buttonwood Investment Services. The Buttonwood Report confirms everything from investment manager background checks and scrutiny of their track record to confirming fund governance and manager skin-in-the-game. CityVest is unique in providing this third-party due diligence report on its investment funds, and we make it available on our website. In addition, the requirement that our funds have auditors and administrators provides CityVest’s investors with a level of safety that far exceeds what is provided by other real estate investment sources. Investors can trust CityVest.
So to recap, CityVest screens and vets best-in-class real estate funds, negotiates better investment returns, and provides access to those funds.
What do you find gratifying about what you do?
My investors often write to me, and they say things like:
“I wish I had found CityVest when I started investing years ago.”
“Thank you for the level of screening and due diligence that you do.”
“I invested in the same fund through another platform with worse terms; I’m sticking with CityVest for now on for all of my investments.”
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