Adam Neumann strikes again.
Back in 2010, he cofounded the now infamous WeWork. The business opened communal office space for entrepreneurs looking to save money, network, and meet clients outside of their homes.
It was a great idea led by a charismatic individual who knew how to wine and dine financial backers like a pro. As CEO, Neumann helped the business grow – fast – gaining international praise and even worship.
Naturally, that went to his head.
Also naturally, it didn’t end well.
WeWork ended up losing around $2 billion in 2018 alone due to increasingly risky management decisions. Add in several scandals – including a private “party” jet – and Neumann was forced to resign later that year.
Now, he has everyone excited about another venture – also real estate-related – called Flow. Most notably, venture capital firm Andreessen Horowitz announced it’s investing around $350 million in the company.
Real estate is my area of expertise. I’ve been involved in the space for decades. So, I was intrigued and decided to do some research on this new venture that was making headlines. But from what I can see so far, it lacks any real concrete details.
Here at Income Investor Daily, we’re not swayed by flashy headlines or personalities. We use our insider contacts and decades of experience to understand the real stories behind the hype. That’s how we find the best income opportunities out there.
Today, I’ll fill you in on my history with Neumann’s ventures. And if you’re interested in real estate, I’ll give you a much better investment model to consider.
One that, naturally, pays dividends.
I Don’t Intimidate Easily
As a real estate enthusiast and analyst, I kept an eye out on WeWork right from 2010 when it first began.
And my team covered WeWork a time or two as well. Our most recent writeup was late last November, when I actually got into a bit of trouble calling out the company’s past…
Mind you, I argued the WeWork of today – post Adam Neumann – was overall a positive company. Despite its past recklessness and continuing issues, the greatly reduced company was growing its revenue.
So, I wanted to highlight it for the speculative opportunity it was. (As for what I’ll say of it now, stay tuned… I plan on interviewing its new CEO next month.)
But that piece caught the notice of someone at WeWork, who didn’t like that we called out its history… especially how recklessly Neumann used company funds.
Here’s the thing, though: My team and I don’t write things we can’t back up. Our research is top-notch, and we always strive to interpret it accurately.
So, we stood by our statements. Because the facts backed them up: Neumann was bad news at the time – and might still be.
This time around, his company, Flow, is focusing on multifamily housing. The only thing I saw on its website was a box to sign up for updates (which I did). Overall, details are scant… Yet Flow is now valued at $1 billion.
At this point, it’s hard to say whether Flow will be the mover and shaker in the industry that it aims to be. Maybe it’ll crash and burn before becoming something viable like WeWork.
It’s too soon to tell.
We will give Neumann this, though: He’s not wrong about real estate being a great investment opportunity, especially today.
He may just be exploiting it the wrong way.
That’s why we put in the legwork to find the right way for those of us who don’t have billions in VC funds.
If you’re looking to get involved in real estate investing safely and make reliable income… My favorite place to put money is into real estate investment trusts, or REITs.
Why I Love REITs
As a former commercial real estate developer, I love talking about REITs and how well they operate in the space.
They’re corporate landlords that own property and rent them out. And since they’re run by professional managers who know their businesses inside and out…
You don’t have to worry about maintaining an entire portfolio of real estate.
They take care of all that for you, while also offering…
Liquidity: There are 200+ REITs trading on U.S. stock exchanges, which make them much easier to trade than, say, a house. Or a mall, office building, or apartment unit.
Diversification: Not only does each REIT own multiple – even thousands – of properties, the larger sector is also full of variety. There are cell tower REITs, retail REITs, data center REITs, hospital REITs… the list goes on.
Transparency: Anyone who’s ever bought real estate – especially in this market – knows they have to work hard to find if it’s a worthwhile investment. But publicly traded REITs are required by law to disclose details. It’s all there on paper.
Add in higher sustainable dividends than many other stocks offer…
Plus consistent stock price growth over time…
And you’ve got an investment category that has easily outperformed the S&P 500 before, including in the 1994-2019 stretch.
That’s why we don’t have to rely on splashy ventures or risk-friendly CEOs to take advantage of the massive opportunity in the real estate market.
For easy access to that kind of growth potential, you can look into the Vanguard Real Estate Index Fund (VNQ). It holds a wide range of REITs and real estate-related companies, giving you instant access to their gains.
It’s a great way to get exposure to the space, regardless of whether any individual project succeeds… or crashes and burns.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily