Happy Friday. This is The Shake 🤝: the weekly newsletter that makes sure to differentiate residential from commercial real estate for our readers to avoid situations like…

Here’s what we got this week:

• The Family Office – A Real Estate Wealth Hack 👪️ 

• The Billboard Niche 🪧 

MARKET RADAR

The Family Office - A Real Estate Wealth Hack 👪️ 

Sorry to disappoint, but we’re talking about Family Offices, not The Office!

I find that as this newsletter grows (and thank you to all of you who have shared and subscribed) that the more vulnerable we are, the better conversations come from our content.

So that being said, I won’t be shy in telling you all that I had absolutely no idea that these existed only a few months ago.

(TL;DR) think financial advisor on steroids.

A "Family Office" is a private wealth management firm that provides comprehensive financial and personal services to high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs).

The primary purpose of a family office is to manage and preserve the wealth of a wealthy family across multiple generations. Imagine being so wealthy that there’s an acronym for you.

All jokes aside, I can absolutely see the value in hiring a Family Office to protect the family’s hard-earned wealth can be a necessity.

Some of the standard services offered by a family office include:

1. Investment Management

2. Financial Planning

3. Tax Planning and Compliance

4. Estate Planning

5. Philanthropy and Charitable Giving

6. Family Governance

7. Risk Management

Investment Management and Tax Planning often involve real estate portfolio discussions and family offices can be heavily involved in the real estate aspect of a HNWI’s real estate investment.

I think each and every one of us knows that off-market deals are the ones to get excited about. Many of these family offices have deep connections that help with deal sourcing.

I can’t even imagine how many deals start with a simple phone call to one of the F.O.’s contacts. In many cases, one HNWI is buying property from another so both can win on taxes in their own way. It’s crazy to think about…

Aside from just making phone calls, family offices are often involved deeper in the strategy of acquisitions. In many instances, these groups are heavily involved in the underwriting, strategy, and due diligence process of real estate investments.

What happens when there’s real estate is already part of the family’s portfolio though? Hopefully not this:

It’s sad to say, but when a family office isn’t involved, this is fairly common.

All of those years of hard work and extensive planning can be gone extremely quickly, and not because of greed. If not properly educated, it’s clear that real estate can be seen as a “cash-out” plan rather than a vehicle to roll more cash flow and tax deferment into one.

Family offices also help manage the family's real estate portfolio, optimizing the allocation of assets and balancing risk and return across different properties and real estate types.

They monitor market trends and property performance to make informed decisions regarding property acquisitions, dispositions, and refinancing. Of course, there are times when it does make sense to exit a property as well.

Family offices help devise exit strategies for real estate investments, considering factors like market conditions, optimal timing, and the family's long-term objectives.

The term “the rich gets richer” plays hand in hand with the way family offices are involved in portfolios for the HNWIs. The question is, how does one even get into this line of work??

The Billboard Niche 🪧 

In this current environment, real estate deals are tough to come by. Investors are always looking for an edge and it might be right beside them.

Picture the ability to identify a hidden gem in the real estate market, brimming with untapped potential, securing an excellent deal on it, and then effortlessly managing it with minimal maintenance and upkeep for solid cash flow.

This might sound like an implausible dream, but the opportunities are right in front of you as you pass by billboards every day. Understanding the unique nature of this industry puts you at a significant advantage in the investment space.

Frank Rolfe, co-owner at CREUniversity and a former major private owner of billboards in the Dallas-Fort Worth area, revealed that the billboard industry is exceptional because it is entirely controlled by the U.S. government. 

Unlike other industries that would undergo deregulation after being regulated in their infancy, billboards remain under federal mandate due to opposition from groups like Scenic America.

Given this, billboards operate under strict zoning and space regulations. Knowing where these designated areas are and identifying places where billboards would thrive, along with gaining control of such properties, provides a substantial edge in a real estate niche that most people are unaware of.

Billboard investments come with unique "protections" that set them apart from other forms of real estate development or investing. Owning a billboard location excludes others from building additional billboards nearby, giving you a lasting advantage secured by the lease and permit for that specific location.

Here are three steps to succeed in profitable billboard investing:

1. Study the maps: Begin by identifying major highways in your area using maps. Obtain a traffic count map from your state, which can be requested from the state department of transportation (DOT).

2. Combine traffic count with ordinance information: Review local ordinances if the location is within city limits, and explore county and state ordinances if it's outside the city. Target high-traffic areas with suitable ordinances for billboard construction.

3. Identify potential properties: Analyze the type of billboard that would work best for each potential property, calculate the construction costs, and estimate the income from renting out ad space. Start identifying properties and making offers.

Earning potential can fluctuate based on factors tied to location and population. Full-sized billboards can rent anywhere from $500-$5k per month.

Here’s why we think the billboard business is an overlooked niche with untapped potential:

• There are limited resources and educational courses on billboard real estate and business.

• The lease and permit for the billboard sign hold the most value in billboard real estate. If you're not interested in managing the advertising, you can sell the lease and permit to capture most of the value.

• Billboard properties require minimal management. Investors often rent ad space for 6-12 month periods, inspect the signs periodically, and can afford to step away from active involvement for a year.

• Entering the billboard real estate market requires relatively low capital investment, with the option to build simple wooden telephone-pole billboards or acquire abandoned signs at a low cost.

Affordable cash-flowing investments are in high demand in these risk-averse times. With this primer, we hope you can unlock the potential of billboard investing and gain a unique advantage in the real estate market.

Here’s to our favorite billboard:

FIN 🤝 If you enjoyed this week's edition, don’t be selfish — share with a friend!

^{DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.}