Fundamentals, not Gambling
There’s an old saying in economics, a rising tide lifts all boats. Stocks, bonds, homes, commercial real estate — all are way up since the financial crisis. To make money, all you had to do was be invested. But there’s luck and there’s skill, and luck doesn’t last forever.
There are always deals, if you know what to look for. our approach is to understand supply and demand better than anybody else. That’s why Alliance specializes in single tenant net lease properties and particularly medical facilities. By focusing our attention on this niche, we’ve honed our ability to spot gems anywhere in the nation, regardless of market conditions.
Medicine is very local. We study markets to get a picture of when they’re underserved. How many doctors are in a region and how many are needed? How many facilities can accommodate them? Where does vacant land and zoning allow for new facilities to be brought into the market? And what territory could a hypothetical new facility cover?
Demographic trends tell us where demand for medical facilities should be high, and where it’s growing faster than supply can keep up. Is the regional population growing? Aging? We want to get ahead of these trends.
Finding the best deals before our competition also requires relationships. A network of friendly agents, brokers, bankers, etc. keeps us informed. Our attorneys and investors are prepared to move quickly when we spot an opportunity.
Instead of getting in on the action, we like to move before the action even begins to heat up. The juiciest prospects are usually in growing regions, which is why so many of our investments have been in the high-growth sunbelt. Even in slower growing northern cities, we can still find terrific investments. As long as we stick to the fundamentals of supply and demand, we’ll continue to beat the market.
As the great investor Warren Buffett said, only when the tide goes out do you discover who’s been swimming naked. Buffett isn’t known as the Oracle of Omaha because he delivered 20% returns in a year. It’s because he has been able to average 20% returns for decades.
Gains come easily during a boom. But only careful attention to market fundamentals will keep you protected the long run.
