Big Money Managers Have A $100T Problem
According to Boston Consulting Group and Bloomberg, big fund managers are struggling. As this $100T space faces a revolution, where will the capital go, and how can real estate investors position themselves to benefit?
The Big Issue
The massive asset management industry appears to be facing a major inflection point.
Coverage of the issue reveals concerns that many large financial firms may face extinction in the near future. Their investor customers have been increasingly demanding cheaper, and more passive investment strategies.
At the same time, money managers face the challenge of trying to make more money in a bear market, which has already seen some lose money for 20 quarters in a row.
Reportedly 90% of the additional revenues these firms have enjoyed over the past 18 years is from the rising bull market, instead of attracting new capital from clients.
In the past six years investors have yanked $600B from these fund managers. With Blackrock seeing $13B in withdrawals in the past three months alone.
For Real Estate Wholesalers
As a real estate wholesaler, how can you benefit from this shift in available capital, and avoid repeating the mistakes these dying firms have made.
Don’t Count On Appreciation Alone
Even as a real estate wholesaler and flipper it can be tempting to sometimes make offers based upon a fast rising market. Whereas savvy investors are always looking to build in an equity cushion with their offers, just in case the market shifts mid transaction.
Sell To Those Providing Passive Income Investments
It seems that passive income investments are increasingly trending in demand. Consider how you can wholesale in volume and create a pipeline to those serving the end retail investors in this space.
Maintain Sustainable Margins
Profit margins that are too thin are frequently the cause of businesses failing. It can also be harder to raise pricing later. Be sure you are operating on strong margins in the beginning, with room to offer deals, and still make a profit.
Serve Those Fearing A Bear Market
Whether you believe it is a bear market or there is a new recession looming isn’t nearly as important as what end buyers and their clients think.
If that fear is driving their decisions and where they put their capital, be sure you are catering to them.
This may include altering the price ranges and property types you are targeting, as well as geographic areas.
Be sure to check out our 1% interest rate deals on loans over $600k, and scale your business this season.
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