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Top Investor Edition: Generational Wealth Portfolio Management

A couple walking in front of their home.

In our December 30th, 2022 piece featured on Canadian Real Estate Wealth entitled we explored what generational wealth is and how people acquire it. We’re going deeper down into the rabbit hole to look at what’s included in keeping that well-earned generational wealth.

Building an Empire

Before we hop to it, let’s just quickly explore a few ways in which one can acquire generational wealth.

House-flipping is when a person or company buys a property, renovates and then resells it.  This can be profitable but it can also have a tremendous amount of unforeseen expenses and is considered medium to high risk.

Rentals can be a great source of income but it too can be a bit of a mixed bag. A rental unit in a good location can appeal to many demographics, in turn, make it a solid long-term income strategy. However, it doesn’t come without some strings; rentals are notorious for their repair costs, particularly in markets that appeal to students or tourists for short-term rentals.

Real Estate Investment Trusts have gained popularity in recent years as they prevent a means by which people can invest less money than they would with the purchase of an entire property and pool their resources with others in a similar position for mutual gain, crowd-sourcing style. The advantage is that there is government oversight but investors still need to do their research.*

The Hard Part Is Maintaining

We turned to REALTOR ® and experienced real estate investor, Sandy MacKay for his expertise on how to decide what is the best methodology to build a real estate generational wealth portfolio.

“Everyone is going to have a different wealth plan through real estate. It depends on your age, your income, access to cash, and your overall life goals. We talk people out of the “house flipping” business every week. It’s not the best path for most people who want to build wealth, but it’s what they perceive to be the best path because it’s on TV. For most people, the best way to build their portfolio is to actually do very minimal work themselves. There are many ways to build wealth in real estate more passively. And that’s the type of wealth most people really want. They don’t want to be spending their weekends checking in on renovations and tenants. Most people don’t realize this is an option, and quite often it’s actually the best option. We help people find these passive real estate opportunities all the time and they absolutely love it!  

Top Investor Edition: Generational Wealth Portfolio Management

If you thought acquiring the assets that make up a wealth portfolio was an uphill battle, think again!

The ability to ensure that the assets comprising a portfolio maintain and gain value is a delicate and precise balance. Knowing the time to jump on the pitch and when to sit on the sidelines takes a high degree of skill. William H. Vanderbilt once said, “Any fool can make a fortune. It takes a man of brains to hold onto it.” It’s for this reason that we tapped Sandy MacKay, a top investor, and generational wealth expert.

Reverse Strategy

The process of generating and ways to maintain generational wealth implore exact opposite strategies.

Whereas acquiring wealth is best when resources are pooled. Prudent portfolio management requires diversification. Spreading wealth over a variety of real estate investments reduces the likelihood that it will all be lost. Reduce total risk by lowering leverage and increasing a safety cushion by investing in different types of real estate including trusts, commercial and residential.

Whereas acquiring wealth assets requires constant active attention, engagement, and course correction, excellent portfolio maintenance often only involves active steering initially. Whereas with maintenance, the less-is-more rule applies. Commonly, investment is buying into other people’s businesses. Then you have no choice but to let the money do the work. In most cases, investors have no influence over how successful the businesses in which they invest are.

By using a systematic approach to real estate investing, you can reduce the impact of luck. Rebalancing your portfolio and setting a portfolio strategy are both crucial for long-term success.

It’s All In The Company We Keep

If this seems to be beyond your depth of knowledge, don’t fret! There are wonderfully-skillful organizations that can help you make the most of your hard-earned buck so that you can not only have the retirement of your dreams but also ensure that there’s enough for future generations.

Apart from the potential to save money through an economies-of-scale approach and stress reduction of all of the question marks associated with a DIY approach to investment, real estate wealth management companies have so much to offer their investor clients. These organizations also used advanced technology for investment error forecasting and prevent these potentially costly mistakes saving their clients tons of money.

Real estate management companies help to minimize legal liability by allowing property owners to remain arms-length away, as well.

Market diversification is also much easier when working with a professional wealth management organization given their access to varied products including commercial.

According to MacKay,

“Active real estate investing is not for everyone. Actually, I’d suggest it’s not for the vast majority of people. Wealth does not need to be built through your own individual efforts. The best investors I know have built a team around them to support their goals. These teams often include realtors, mortgage brokers, property managers, accountants, lawyers, contractors, etc. But the ultimate team member for most people is a real estate wealth management company. They can do all of the work for you and you can diversify your portfolio and relieve yourself of all the typical real estate investment headaches. “

In Conclusion

A skilled real estate wealth management company is the best choice for you if investing in and succeeding in real estate is your main objective, or if you’re looking for your real estate investment asset to traverse multi-generationally.  Perhaps the greatest benefit of a wealth management company is that of vitality. The freedom to live life without having to monitor the rise and fall of a market makes one intrinsically wealthy.

For more information on how to build a wealth portfolio for your family that includes real estate assets, connect with Sandy MacKay of MacKay Realty Network or email him at sandy@mackayrealtynetwork.com.

About the Author

Heather McDowell is a mother and a REALTOR®. Heather has spent most of her real estate career selling residential real estate, and its leasing and has dealt with the additional complexities of the cottage, timeshare and rural properties, and condominiums. She has dabbled in new construction and is expanding her portfolio to include commercial sales and leasing. Heather is also a dedicated volunteer for both the local women’s shelter and a national hospice organization and is an emerging playwright. Heather describes her focus as diversifying real estate content that not only addresses national matters but explores those issues unique to each province and territory. You can contact Heather at heather@crewmedia.ca or find her on socials at: Facebook – https://www.facebook.com/thestoreytellingcompany/ LinkedIn – www.linkedin.com/in/heather-mcdowell-98134118b Instagram – https://www.instagram.com/hmcdowellrealty/  

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