The Hidden Dimensions of Investing

Case Study: Land Fund Paying 16% Distributions

(I don’t know how that owl ended up with three legs but just go with it)

Tomorrow the Co-Investing Club is meeting to vet this month’s investment: a land fund that pays 16% in quarterly distributions.

The fund has paid on time every quarter since inception. The operator consistently earns 30-35% net profits in the business’ land investments.

We know firsthand, because we invested with them last year too.  

“Yeah, but past performance doesn’t guarantee future results, right?”

Of course. Every investment comes with risk. But this operator is a veteran land investor with plenty of experience who has consistently performed.

Let me propose an alternative question: If this investment truly offers asymmetric returns (high returns with moderate risk), what are the tradeoffs on the other dimensions?

This Investment’s Other Dimensions

Here’s how this land fund stacks up on the other dimensions:

• Liquidity: None

• Time commitment: 4 years

• Tax advantages: None

• Minimum investment: $50,000 (if you invest by yourself; Co-Investing Club members can invest $5K)

• Access for non-accredited investors: Yes

• Percentage of people who understand the investment: Very low

• The operator’s ability to attract investors: This company excels at land investing, not marketing

• Personal values: Non-controversial

As you can see, there are tradeoffs for those high returns with moderate risk. You have to lock up your money for four years. The fund doesn’t come with tax advantages, unlike some other passive real estate investments.

You also benefit from the fact that most people don’t know anything about land investing, and this operator doesn’t have a slick marketing department. There isn’t a herd of investors all tripping over each other to throw money at them (unlike, say, AI companies).

Starting to see how some investments can offer high returns with moderate risk?