Alternative investments have gained popularity in recent years as people seek diversification and potentially higher returns outside the stock market.

However, several myths and misconceptions often surround these non-traditional investment options, leading to hesitation and skepticism. Let’s debunk some common myths about alternative investments and shed light on the realities.

Myth 1: Alternative Investments are Only for the Ultra-Wealthy:

Decreased Bar to Entry:

• Blue Bay Fund I has opened the door for smaller investment amounts into real estate that typically take much larger amounts to invest. The initial fund investment amount is only $50,000, and additional investment amounts can be increments of $1,000.

• Blue Bay Fund I allows fractional ownership of slices of investments rather than the entire investment required. For example, if you were going to invest in a loan for a new construction project that cost one million dollars, you must have $1,000,000 in liquid cash to invest. The same loan can be slip up into $10,000 investments to our fund investors.

Myth 2: Alternative Investments Are Highly Risky:

While it is true that alternative investments can carry risks, it is incorrect to categorize them as universally highly risky. Like any investment, risk levels vary depending on several factors. Most investors focus on the underlying asset class of the investment, followed by the exit strategy. At Blue Bay Fund I, I am hyper-focused on educating investors. These are NOT the best determination of reduced risks; rather, it’s which side of the capital stack their investments are on. Blue Bay Fund also addresses risks through the following.

1. Diversification: This is greatly beneficial and highly sought after. Alternative investments often have low correlations with traditional assets like stocks and bonds. However, even within the real estate category, investors need diversification of assets, geographical location, and the number of investments held. Due to our low bar to entry and fractional investment slices of our opportunities, passive investors can truly diversify their real estate investment portfolio.

2. Inflation protection: Certain alternatives, like real estate and some commodities, can offer protection against inflation, which erodes the buying power of your traditional investments. For example, real estate rental income often increases with inflation, while gold historically maintains its value.

3. Access to multiple asset classes: Alternatives offer exposure to asset classes not readily available through traditional markets. For example, venture capital provides early-stage exposure to potentially high-growth companies, while private equity allows investment in mature, non-public companies. These can offer diversification and potentially higher returns but with added risk. Blue Bay Fund I offers investments secured to (Debt) and backed by (Equity) real estate across all the asset classes, single-family residential, commercial, and multi-family.

4. Risk-mitigation strategies: Again, based on which side of the capital stack you choose to invest in, Debt or Equity, even more “risk managed” alternative investments may still represent a significantly higher risk; think of investing in syndication, where you are a limited partner helping purchase an asset such as an apartment complex. I believe and direct Blue Bay Fund I to invest primarily in Debt as this holds the greatest risk mitigation strategy available across the board. By becoming the lender; thinking, analyzing, and investing like the banks do, offer the broadest and most risk-mitigated investment in the alternative space.

Myth 3: Alternative Investments Lack Transparency:

1. Technology Platform: Many alternative investment services offer some sort of technology platform where the investor has more detailed access to what is happening to their investments. Blue Bay Fund investors have their own personalized portal where real time portfolio values, returns, and assets held by the individual investor are clearly seen.

2. Due Diligence: While every investor should conduct due diligence, many times as a passive investor this can be difficult and even overwhelming in gaining access to all the most important information needed to make a decision. For example, something as important as an appraisal. Most limited partners in syndication may not have access to the appraisal report conducted on a commercial property, or even the borrower details. If the passive investor is investing in a mortgage fund, these are never disclosed. My partners in Blue Bay Fund have access to all the information that I utilize to make investment decisions. Complete and full transparency.

3. Reports: Sometimes passive investors in syndications may have quarterly or bi-annual updates with their general partner, most other reports such as financial and asset specific reports are not readily available if not at all. In Blue Bay Fund, with the help of our technology platform, we make passive investing easy, streamlined, and transparent, along with regular meetings and deal reviews available to all our fund investors.

By debunking these common myths surrounding alternative investments, people can gain a clearer understanding of their potential benefits and risks. Alternative investments offer diversification, potential higher returns, and access to unique opportunities beyond traditional investments.

As with any investment, a well-rounded portfolio should be built based on individual goals, risk tolerance, and a clear understanding of the investment options available. Blue Bay Fund I is leading the charge here in Florida in the alternative investing space for both Debt and Equity investments. If you are interested in reviewing the fund’s prospectus and investment structure, you can schedule a pitch deck presentation below.

Disclaimer: The information provided in this post is for educational purposes only and should not be considered as financial, tax or investment advice. Always consult with a qualified professional before making any financial decisions.