GVP Insights: Real Estate vs. Treasuries

Los Angeles, CA

Gelt Venture Partners

In today's rapidly evolving investment landscape, where market dynamics can change in the blink of an eye, informed decision making is paramount. As we navigate the complex terrain of investment options, our Investor Insights' is dedicated to an examination of two distinct asset classes: Real Estate and U.S. Treasuries. We aim to equip you with the advantages and disadvantages each avenue presents and provide two scenarios, empowering you to make sound investment choices aligned with your financial objectives.

Real Estate:


• Income Generation: Real estate can provide a steady stream of income through rental payments.

• Appreciation Potential: Real estate assets have the potential to appreciate in value over time, potentially offering capital gains.

• Inflation Hedge: Real estate often acts as a hedge against inflation, as property values and rents can increase with rising prices.

• Diversification: Real estate investments can diversify your portfolio, reducing risk through lower correlation with other asset classes.

• Tax Benefits: Real estate investors may benefit from tax advantages like depreciation deductions, cost segregation studies, and 1031 exchanges.


• Liquidity: Real estate investments are less liquid compared to treasuries. Selling a property can take time and effort.

• Maintenance and Management: Real estate requires ongoing maintenance and management, which can be time consuming and costly.

• Market Volatility: Real estate markets can experience fluctuations, and property values may decline.

U.S. Treasuries:


• Safety: Treasury securities are considered one of the safest investments because they are backed by the U.S. government.

• Stability: Treasuries offer a stable and predictable income stream through interest payments.

• Liquidity: Treasury bonds and bills are highly liquid and can be easily bought or sold in the market.

• Diversification: Treasuries can be used to diversify a portfolio and reduce overall risk.


• Low Yields: Treasury yields are often lower compared to other investments, potentially leading to lower returns.

• Inflation Risk: Treasury investments may not keep pace with inflation, leading to a decrease in purchasing power.

• Interest Rate Risk: When interest rates rise, the market value of existing treasuries may decrease.

• Taxation: Interest income from treasuries is subject to federal income tax.

In our exploration of the merits of real estate versus treasuries, we present two scenarios that exemplify the power of strategic investment choices.

In Scenario #1, we examine the allocation of $100,000 into a 10-year treasury, securing a fixed rate of 4.15%. This scenario offers a path characterized by stability and liquidity, coupled with the potential for a 1.5X equity multiple. Upon the culmination of the investment period, the initial $100,000 evolves into a respectable $150,173.

In Scenario #2, we take the same $100,000 allocation but into a real estate asset, introduce a 70% debt and 30% equity mix, and embark on a journey of risk mitigation and wealth creation. Against the backdrop of a 3% inflation rate, this equity averages an impressive 10% annual growth rate. After 10 years, investors are rewarded with an impressive total return of $214,638. With the addition of an average annual cash flow of 7%, the total return escalates to an astonishing $284,638. This represents 3.69 times. more wealth built than what a 10-year treasury investment would yield.

Should you have any questions, require further insights, or wish to discuss potential investment strategies tailored to your portfolio please do not hesitate to reach out to our team. We are dedicated to providing you with the expertise and support needed to make informed real estate investment decisions in this dynamic landscape. Thank you for your continued trust in our analysis and guidance.

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