80 Million Net Worth Multi-Family Investor Buys... Muni Bonds?

[Travis Watts]

Thought this was interesting and worth sharing. I have a personal mentor in my network worth approximately 80 million. He primarily invests in multi-family real estate; however, I recently discovered that he holds nearly 40% of his portfolio in tax-free municipal bonds. Upon learning this fact, my first thoughts was...why invest in an asset that yields 3% when you could invest in real estate and potentially have a much higher return? Then he explained the lesson. In summary, the lesson was about capital preservation, NOT potential equity upside or seeking the highest yield. In other words, this is a risk mitigation strategy in his mind. After all... 32 million x 3% = $960,000 a year in tax-free income - Not bad

Most of us in this forum love multi-family real estate, myself included. Here are some questions that came to mind:

• 1. How do you rank the importance of capital preservation (protection of your initial investment) when it comes to investing in multi-family? #1, #2, #3?
• 2. Do you diversify in any other asset classes? If so, feel free to share which ones
• 3. How do you evaluate risk vs potential return when making an investment?