Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:


By David Sung, CFP, CLU, CHS, CIM & Wayman Crosby RI(BC), PCC

When most of us hear “The Kennedys,” we think of America’s “Royal Family.” They are descendants of wealth and high esteem, but how did they achieve it?

Initially, family patriarch Joe Kennedy used his entrepreneurial instincts during the prohibition to earn a respectable sum. But, the family’s wealth didn’t become a thing of legend until he got into real estate during World War II, earning an estimated $100-million.

In 1945 Joe made a deal that became the centerpiece of the Kennedy fortune: for just under $13-million he bought the Merchandise Mart in Chicago, the world’s largest commercial structure. In 1998, the family sold it for $600-million.

After having accumulated his wealth, real estate was Joe’s way of focusing on capital preservation. With the help of expert advice, and in concert with several other investment opportunities, it proved to be the financial foundation for many generations.

In managing wealth for high net worth families, like the Kennedys, Nicola Wealth Management (NWM) has taken a long-term view on real estate investments. Over the past 15 years we have learned many important lessons which have helped us form a steadfast real estate investing strategy.


Real estate is an important component of any balanced high net worth portfolio. Unlike equities and public markets, commercial real estate valuations happen rather infrequently; there’s no daily price volatility feeding into the fervor of stock watching and market timing.

Real Estate Investment Options

What real estate options and alternatives are available to investors? Here is a brief list:

Publicly Traded Options:

  • Public REITs (Real Estate Investment Trusts)
  • Public companies and substantial real estate holdings (landlord and tenant)
  • Real estate mutual funds

Privately Owned Options:

  • Commercial real estate (office buildings, shopping malls, industrial parks, self-storage, hotels)
  • Residential real estate (homes, condos, apartment buildings)
  • Recreational real estate
  • Land for future development
  • Real estate development and value-add opportunities to existing properties
  • Real estate Limited Partnerships (open and closed end)
  • Syndicate investments

The Kennedys built their real estate empire by focusing on that second list and physically owning private hard asset real estate. So how can one start to invest like a Kennedy?

Getting Started

Prior to real estate, Joe Kennedy’s business ventures helped him amass the considerable wealth required to “get in the game,” in the first place.

Building wealth through real estate, just as with equities and other asset classes, involves a combination of good cash flow and limited volatility. Let’s examine what financial and investment conditions would allow you to invest like a Kennedy.

  • An initial $2-million of available capital. this initial amount should be enough to get your foot in the door.
  • The ability to add capital to your real estate allocation. This is a crucial element; the ability to diversify assets and take advantage of opportunities is what will allow you to successfully grow your real estate portfolio.
  • The ability to diversify from the start. That is to say, don’t put all your eggs in one building. Just like with equities, you want to diversify your portfolio by categories such as location (local, regional, provincial), type (self-storage, retail, apartment building) and tenancies (types of retailers, office space).
  • An interest in potentially leveraging your assets to enhance returns. It takes money to make money, and part of having access to capital may mean the willingness to strategically leverage your existing properties to create more cash flow.
  • A desire for investment cash flow. Good, consistent cash flow is what will allow you to make the most of your leveraged properties.
  • Understanding the local context. There is no substitute for understanding the geography of your investment and the state of the market you are investing in. It is safe to say that real estate is local and should be understood at that level. If you’re considering investments outside of Canada, you’ll also have to consider the various tax and legal differences.

These conditions help you assess your financial situation, investing acumen, and risk tolerance. Directly investing in private hard asset real estate can provide excellent financial rewards, but it requires certain expectations and an understanding on your part.

Knowing What You Need

Let’s assess your position and preparedness to participate in direct ownership real estate by answering a few key questions.

Do you have the expertise and real estate knowledge base to know you’re purchasing a good property?

Even Joe Kennedy sought advice when he started his real estate portfolio. Kennedy entrusted much of it with a shrewd broker named John J. Reynolds, who was the real estate counselor for the Archdiocese of New York. His mandate? Make Kennedy richer with minimum risk.

If you don’t have the expertise to know if you’re making a good purchase, leverage your network and find an associate whose real estate knowledge, expertise and judgment is assuring. Otherwise, it’s not called “risk,” it’s called “gambling.”

Do you have the time available to perform research, due diligence, and ongoing maintenance?

This is probably the least considered aspect of direct ownership real estate. Assuming you have knowledge and experience on your side, either personally or in a reliable associate, you still have to be a part of the evaluation and decision making processes.

After due diligence and the deal is finalized, you have officially become a landlord. You are responsible for the direct or contracted property management of your new asset. This includes securing the right tenants, lest you risk losing your cash flow for extended periods.

Do you have sufficient capital / liquidity and access to appropriate leverage?

Undoubtedly, purchasing real estate is not for the faint of wallet. Having access to that capital and maintaining enough liquidity to support the ongoing maintenance of your investment property is important.

In terms of leverage, is your business acumen able to get you good rates with the right lenders under the proper deal structure?

Do you have a network of potential partners who share your investment values, philosophy and time horizon?

It is highly unlikely you will purchase an asset entirely on your own; you will likely be investing alongside others, who are aligned with you. Even if you have the capital to be a sole purchaser, why would you want to? As discussed, diversification is crucial to mitigating risk, something of which Joe Kennedy was keenly aware in all his investments.

Are you comfortable with cash flow over capital appreciation?

It is highly unlikely you will purchase an asset entirely on your own; you will likely be investing alongside others, who are aligned with you. Even if you have the capital to be a sole purchaser, why would you want to? As discussed, diversification is crucial to mitigating risk, something of which Joe Kennedy was keenly aware in all his investments.

Are you comfortable with cash flow over capital appreciation?

The property value of real estate is often the “sexy” part of wanting to invest. But the reason most hold on to the property is the cash flow from rent. This is the payoff for conducting painstaking due diligence and meticulous deal structuring – to ensure that long-term profitability comes not only from potential price appreciation of the real estate asset, but also from the net rental income, or the capitalization rate.

Remember, it took The Kennedys over 50 years to realize the gain from the Chicago Merchandise Mart, so that wasn’t what made the family wealthy. Joe Kennedy bought the building for $12.5-million, but a few years later he was making more than that in annual rent.

Take on all of the work yourself or pay fees to the professionals – which are you willing to do?

What it boils down to is: are you prepared to do the work yourself?

Starting your own portfolio of hard asset real estate is not easy. There is a reason why those who manage real estate limited partnerships charge a fee: there’s a lot of hard work and expertise involved.

Nicola Wealth Management utilizes a wholly owned subsidiary, Nicola Crosby; a team of experienced commercial real estate experts who work diligently to find, assess, acquire, and manage the best real estate opportunities for our SPIRE LPs on behalf of NWM clients.

Putting It Into Action

After examining the principles behind real estate investing, requirements to start, and the key points you need to know before building your portfolio – how is this put into practice?

The template below illustrates the actual process our Nicola Crosby team uses to assess real estate properties for SPIRE Real Estate LP, SPIRE US LP, and the SPIRE Value Add LP, NWM’s hard asset real estate portfolios. While these are not “personal real estate portfolios,” all the same principles apply. The difference lies in the structure implemented by which investors can participate.

Develop A List Of Investment Criteria To Evaluate Potential Opportunities.

SPIRE’s investment criteria include:

  • property type and size
  • geographic location and size of market
  • cash flow
  • tenant mix and risk
  • projected rate of return (detailed 10-year, year-by-year projections)
  • age of buildings and construction details
  • neighborhood influence
  • suitability for longer-term hold

Assemble a team that can help to evaluate available properties. Have access to reliable consultants, advisors, and managers with real estate experience. SPIRE’s team typically includes lawyers, realtors, property managers, mortgage brokers, appraisers and engineers.

Put the property under contract, usually with a refundable “good faith” deposit while you conduct your evaluation of the property.

Complete your “due diligence” which usually involves spending money. In conjunction with your key advisors and team members, know the right questions to ask. You want to evaluate:

  • environmental risks
  • condition of the building and associated services, including roof, structural, heating and ventilating systems
  • land use and zoning
  • legal and title issues
  • compliance with governmental authorities
  • neighborhood analysis, including competitive evaluate the credit worthiness of the tenant(s) and viability of their business
  • tenant improvement costs on renewals and releasing
  • leasing commissions and property management contracts
  • confirmation of value usually supported by an appraisal

Source the proper financing with a lender. Ensure you have the appropriate leverage and suitable terms that meet investment objectives for the property and on terms that are not overly burdensome on you. Also set up appropriate reserves for capital expenses, including ongoing repairs and maintenance.

Remove subject conditions once the due diligence is complete and you are ready to commit to the purchase with a non-refundable deposit.

Complete the purchase and either finalize the assumption of existing financing or conduct the placement of new financing.

Finalize post-closing details including arranging insurance (both on the property and for your own liability) and complete transfer of ownership. Source appropriate property management and leasing agents to ensure the investment is maintained, kept fully leased, and is properly positioned in the marketplace over the longer term.

Historically, real estate has proved to be a significant portion of many wealthy investors’ portfolios, but investing like a Kennedy is no easy task. While privately owned real estate has the potential to reap generous rewards, remember: its price tag also comes with a need for hard work, sound judgment, and smart decisions.

It is with this in mind, that we created the SPIRE Limited Partnership funds for our clients.

Joe Kennedy and his family devoted massive amounts of time, effort and resources to their investments to keep them cash flowing and relevant – but you don’t need to.

The team at Nicola Crosby maintains these same values in order to build our SPIRE LPs. They focus on major markets, and diversified assets by product-type and location to build our clients a Kennedy-style portfolio, without the headache.
2015-10 Investing Like A Kennedy - SPIRE descriptions

This material contains the current opinions of the author(s) and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. All investments are subject to risk and may lose value.