From Active Investing Through Direct Ownership To Passive Investing Through Realized Portfolio™

Posted by David Wieland on May 29, 2020


In an earlier blog/chapter in this e-book, we introduced the concept of Investment Property Wealth Management™ as an alternative to real property ownership. The idea behind the IPWM™ solution is to use commercial real estate as a foundation to generate passive income, an important factor for investors approaching retirement. 

IPWM™ does this by moving investors away from direct property management and moving them toward passive property ownership. This is done by exchanging real property, using Section 1031 of the Internal Revenue Code, into diverse portfolios. These proprietary Realized Portfolio™ consist of carefully selected Delaware Statutory Trusts and tenant-in-common structures, along with triple-net-lease properties, Qualified Opportunity Funds/Opportunity Zone assets and REIT stocks. Realized Portfolio™ are designed to manage risk while aiming to generate steady cash flow and ensure wealth preservation for heirs.

The first blog/part of this book introduced three important IPWM™ cornerstones: predictable income, risk management and wealth preservation. The following reiterates these important core concepts in greater detail, and explains how they operate in concert with investments.

Predictable Income

Once investors’ lifestyle and investment goals are solidified, IPWM™ professionals formulate a “1031 plan,” by developing a sample Realized Portfolio™. These customized portfolios demonstrate improved and anticipated cash flow and risk-adjusted returns through income-sheltering techniques and diversification; diversification is the main component of Modern Portfolio Theory. The 1031 plan provides tailored passive-income-generating roadmaps, geared specifically to the unique needs and requirements of each investor.

Risk Management

Realized Portfolio™ are set up to spread and manage risks, while aiming to increase returns, using a variety of investment vehicles specifically tied to real estate. Knowledgeable sponsors target and perform due diligence on institutional-quality investments and commercial real estate, eventually acquiring and managing the assets. These experts quantify potential cash flow and potential risk through tested tools including assumption validation, modeling and third-party data. The end goal is a well-performing portfolio, consisting of assets diversified by type, tenants and location.

Wealth Preservation

IPWM™ professionals take advantage of investment methods and appropriate tax-sheltering techniques — such as 1031 exchanges and the Opportunity Zone program — to help preserve the principal, while pursuing better better cash flow and lower taxes. In addition to allowing investors to keep more of their generated wealth, these practices also help with estate planning by ensuring that stable wealth, with minimal assets, is passed down to heirs.

Steady Returns and Capital

The IPWM™ program borrows wealth-management techniques successfully used in growing other portfolios, and combines them with the relative stability, reliability, and safety of real estate assets. By customizing investments to help meet individual needs, goals and requirements, IPWM™ strives to enable constant income for those approaching retirement, while helping to ensure wealth stays intact, and can be passed onto future generations.

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