The economic headwinds began early in 2022 with the war between Russia and Ukraine and continued fallout from the COVID-19 pandemic. Due to the war, sanctions have been flying around, primarily targeting Russia. These sanctions are impacting global trade, as are the responses that Russia has made such as restricting natural gas flows to western nations.
For the majority of the year, the story has been around inflation. Despite hawkish actions by the Fed, inflation remains stubbornly is still high in America and many other nations that printed large amounts of currency in order to help their economies to survive during the early stages of the pandemic. Supply chains, while seeing recent improvement, remain sub-optimal in many nations and are still recovering from the pandemic.
The end result for stock investors has been one of the most volatile, unpredictable markets on record, and many of investors are getting fed up with all of the volatility and poor performance.
Exactly How Volatile Has 2022 Been?
2022 has actually been one of the most volatile years for the stock market in decades. In the first six months of 2022, the S&P 500 saw a 20% drop and the Nasdaq 100 saw a roughly 30% drop. One. way to measure volatility is to look at how often the stock market has moved by more than 1%; according to a recent study, the last time we saw so many 1% moves was in the Great Recession of 2008. (Unfortunately, the majority of these swings have been to the downside.)
Even the usual inflationary safe havens haven't been immune. The Fed's tightening has caused a strain on the bond market, and rising yields haven't been able to keep pace with inflation, meaning net loss of purchasing power for those investing in high yield savings accounts, money markets or CDs.
While aggressive interest rate hikes were expected, many were hoping to see inflation peak and reverse course earlier this summer, followed by a pause or even a drop in rate action. That obviously hasn't happened; while we're now looking at more aggressive hikes many analysts expect stock market volatility to remain at elevated levels for the foreseeable future.
What Can Investors Do?
One of the best things that investors can do to improve their portfolios this year is to turn to multifamily real estate investing. If you can allocate at least a portion of your investment portfolio into a passive income-generating investment such as multifamily real estate you can avoid the wild swings of the stock market.
1. It Generates Passive Income
Multifamily real estate can generate passive income for investors that can keep pace or frequently outperform inflation.
With the costs of single family housing soaring, demand for rentals has only increased in 2022 and multifamily investors have benefitted. Good operators have been able to increase rents while controlling optional costs, boosting regular cash flow and optimizing returns for their investors.
2. It is Very Low-Maintenance
Unless you're actively going to manage the properties yourself, real estate investments can be extremely low maintenance. With multifamily syndication, all that you have to do is to provide the capital to the sponsor, and the sponsor will find the investments, manage them on your behalf, and deal with the payouts for you.
Because sponsors do the vast majority of the work, investing in syndication is one of the single most convenient ways to deploy capital and generate good returns. It's a big reason why so many wealthy individuals and families choose to allocate a significant portion of their wealth into real estate.
3. Real Estate Tends to Appreciate in Value
While real estate generates cash flow in the form of rental payments, it also tends to appreciate in value over time.
Good multifamily real estate syndicates are excellent at selecting properties in the right neighborhoods with the right features and amenities in order to optimize appreciation and cash flow, creating a great balance of growth and income throughout the life of your investment.
Making the Move to Real Estate
Some people wait to invest in real estate because they think it will be too complicated or stressful. If you're hesitant, making the switch might be easier than you think. You can avoid all of the difficulties of becoming a successful real estate investor by choosing to invest with a multifamily syndicate instead of going it alone.
If you qualify, you can gain access to some of the best multifamily property investing opportunities in your region. Most multi-family syndicates require initial investments of at least $50,000-$100,000 to get started. So, meet the investor requirements and are looking for a proven way to escape the volatility of the stock market, then you could be a great candidate for multifamily real estate investing.
If you do decide to move into multifamily real estate investing, do your research and make sure you partner with an operator that aligns with your goals. For newly accredited investors, consider what the right investment size is to fit your budget and liquidity needs. You can always make additional investments as you go.
About Ellie Perlman
Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.
At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.
In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.
Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.
Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can learn more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.
*The content provided on this website, including all downloadable resources, is for informational purposes only and should not be interpreted as financial advice. Furthermore, this material does not constitute an offer to sell or a solicitation of an offer to buy any securities.