Eric Ames, president of NuWire Group Inc., has been passionate about investing for most of his life. Back in high school, he started investing in mutual funds after he got his first job. That wasn't fulfilling for him, so he switched to trading stocks.
"That was a lot more engaging, but still I wanted more," Eric says. "In college, I started investing in real estate."
He tried several different strategies, starting with lease options in which he had quite a bit of success. Then he went into land development, fix and flips, traditional buy and holds, and even invested in some foreign real estate projects. Through all this, he helped other investors find investment properties for themselves as a real estate agent.
When the market crashed, he stopped selling real estate, but has remained active in the market. He decided to help people through NuWire, a site that educates and updates investors on the news, trends and opportunities in the alternative investment marketplace.
We recently checked in with Eric to learn the ins and outs of alternative investments and why they're worth checking out. Here's what he had to say:
There are (approximately) a billion websites and resources out there offering advice to investors. Why should we follow NuWire?
Because 99.99 percent of them focus on traditional investments (like stocks, bonds and mutual funds) or a single specific investment (like real estate). Here at NuWire, we focus on alternative investments. We cover a lot of real estate, but also a lot of other alternative investments; there aren't many other sites out there like us.
What is an alternative investment?
It really depends on who you ask, but at NuWire we say alternative investments are anything outside of the traditional stocks, bonds, mutual funds and ETFs.
How popular are alternative investments today?
I think this could really be looked at in a couple different ways. If you want to talk about transactional volume, alternative investments are hugely popular. However, I prefer to talk about it in respect to regular everyday investors. Institutional investors, along with the very wealthy, have been investing a ridiculous amount of money in alternative investments for years; but if you look at how much regular investors are investing in them, it really isn't much. I think the biggest reason for that is a lack of opportunity and lack of knowledge. They don't know what they don't know. That's one of the primary reasons NuWire was started: to increase the awareness around alternative investments.
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What are your favorite types of alternative investments? Why do you like these?
For me, it's real estate. I love the flexibility and creativity that comes with real estate investing; the deal is only limited by your imagination and negotiation skills. The best deals in real estate are when you have the vision and creativity to see something that no one else sees in a property or transaction.
What types of alternative investments are you more wary of?
It's hard to really say any investment option is clearly worse than another. At the end of the day, it's going to come down to the knowledge and skill of the individual investors. Someone could be a horrible real estate investor, but an incredible Forex trader.
In terms of being "wary," I would offer up the warning that many types of alternative investments are not regulated. While any investment, regulated or not, comes with risk, unregulated investments are going to have higher risks associated with them.
Make sure you do your due diligence on any investment opportunity, and don't take a promoter's word on anything; come to your own conclusion. If something doesn't feel right, move on; there is always another investment opportunity.
What types of considerations should individuals make when trying to figure out what types of alternative investments are right for them?
I think this starts with some internal reflection and discussion if you're married or investing with a partner. You ultimately need to figure out what type of risk you're comfortable with; and then from there, I'd take stock of any skills you can bring to the table. For example, if you happen to be a handyman, it could make a lot of sense to focus on real estate where you can add value to your investment. Then think about your passions. When you are passionate about an investment, you're going to devote more time learning about it and perfecting it. It's possible you might not make as much money as some other investment opportunity, but you'll have a lot more fun doing it.
What are the most straightforward alternative investments we should consider when getting our feet wet? What about some more labor-intensive ones?
Whether or not an investment is going to be "labor-intensive" is really up to the investor. I can structure a real estate investment deal that is super labor-intensive, or I can structure a deal that requires virtually zero labor on my part. I think the better question is, "Which investments are easier for people to get started with?" With the growth of peer-to-peer lending and crowdfunding, loaning people or businesses money is incredibly easy to do, and you can get started with very little money. I think this is a great way for investors to start to get their "feet wet," make some money, and have fun investing.
What are some of your favorite resources for people who are interested in alternative investments? What resources should people take with a grain of salt?
This is really going to depend on which type of investment they're looking at, but in terms of real estate, there are a lot of great resources (Zillow, Zilpy and even Google Street View).
In terms of actually using the information, I'd actually say that investors should take it all with a grain of salt. Online resources are mostly just meant to be a guide. Use them to help narrow things down and inform a more in-depth, due diligence process. For example, I might use various online tools to narrow down my search to the top 10 opportunities; but from there, I need to really dig in to each one individually. Those online tools aren't going to be able to spot a house that has a power line in the backyard and so on.
What investment headlines or trends are you following closely today? Why do they interest you?
I'm paying close attention to the rise of property prices in relation to income. This is really market (and even area) specific, but in most places prices have been rising significantly more than income. When you add in the fact that mortgage rates are rising, it means that people are going to be stretching their budgets in order to get into homes. We obviously haven't hit that breaking point yet, but it's something I keep an eye on as a real estate investor. If you're doing straight buy and hold - where you know your cash flow on a property going in there is a lot less risk, but with land development and flips especially - you certainly don't want to get caught holding the bag when the market turns (something a lot of investors learned during the last crash).
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