Depreciation: the rare tax word that actually works in your favor.
Buying more AI to diversify your AI is not, technically, diversification.
After a multi-year downturn, real estate looks well positioned as a new cycle takes shape. New construction has slowed sharply, which tends to keep occupancy firm and set the stage for the next leg of rent growth. Values have been stabilizing and transaction activity is picking back up, the kind of backdrop that historically rewards patient, selective capital rather than broad exposure.
What often gets overlooked is the tax angle. In a taxable account, certain real estate investment strategies can offer tax-advantaged income, since depreciation can shelter a meaningful portion of distributions. For high earners, how much you keep after taxes can matter just as much as the headline yield.
And here's the piece worth sitting with: nearly every portfolio today leans on the same AI theme. That concentration feels comfortable until it isn't. Real estate strategies are driven by fundamentally different forces like supply, demographics, and income, which makes it a genuine source of diversification when so much risk is pointed in one direction.
Building a portfolio for the next decade means looking beyond the crowd. Happy to share how I'm thinking about it.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Investments in real estate may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Other risks can include, but are not limited to, declines in the value of real estate, potential illiquidity, risks related to general and economic conditions, stage of development, and defaults by borrower.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.