Investor Resources

The purpose of the fund approach is to be diversified and spread out risk. There are specialized funds that may concentrate on one. Like all self-storage funds or an all multi-family fund, that's a specialized fund. Then there's still a level of diversification there, like I said with the market it's all on that one asset type and there are pros and cons to that.

One pro being the managers may be very specialized in that one asset. They may concentrate on putting all their efforts into value add strategies and improvements on that one asset type. That accelerates the learning curve on that asset because it's very specialized, very, very niche.

A con of that could be a change in the market. So a very niche fund that, that I was aware of was a triple net restaurant. All they did was buy these triple net specific restaurant types and corporate had a problem, and they ended up closing  X amount of stores and that fund suffered.

It was very specialized, but they got hurt in that asset type, I'd imagine. a lot of multi-family funds got hurt during Covid because there were moratoriums on rent. So, you know, they, might have been sweating there and if, you know, perhaps there was no bailout or, or government forgiveness they could be closing up shop over something like that.

So the other type that's a specialized fund and still has some diversification is a blind pool fund, which is what we do. And Blind pool is basically you're putting your faith in the managers and sponsors of that fund, and they're making decisions about where to place that capital.

So you might not know what they're gonna invest in. If you invest in a type of fund like that  whatever it says in their PPM agreement, it could be limited to specific asset types. They might just do multifamily storage and mobile home parks, or it could be completely open and they could do everything from hotels to golf courses to multi-family, retail, and industrial.

You just have to read the fund documents to get into what assets they're able to invest in. The pros and cons of a blind pool fund are you're taking advantage of true diversification, so not only asset regions, but different asset types. In case there is a detrimental effect on something, right?

So for example, hotels. Airbnbs affected the hotel industry, there are other assets there to kind of balance out that portfolio. So that is really true diversification in our opinion. That's the path that we pursue.