Ellie Perlman, CEO of Blue Lake Capital LLC – Growing & Preserving Intergenerational Wealth With Multifamily Investments.
I unfortunately lost my home in the California fires this year, and the experience reminded me in an instant of how quickly everything someone has built can just be … gone. While I’m very fortunate to be able to recover from this, the reality is that family office leaders are often kept up at night by the same concern: How do we protect what we’ve built?
The path to forming a family office is rarely intentional or a goal someone has set out to accomplish. It’s often a byproduct of success, because wealth has a way of outgrowing spreadsheets and casual oversight. Over time, priorities shift, from building capital to protecting it.
As part of a family office myself, and in working with many others, one answer often starts with real estate for a wealth preservation strategy.
Here are three core benefits that can make real estate a foundational hedge:
1. Inflation Protection With Tangible Assets
In an environment of rising interest rates and economic uncertainty, inflation can be a silent tax on cash-heavy portfolios. Real estate, especially multifamily and industrial assets, may provide a reliable hedge.
Unlike stocks or bonds, real estate income can adjust to inflation over time. Leases can reset annually (or even monthly in multifamily), allowing rents to rise along with the consumer price index. That means the purchasing power of income is preserved, even as the dollar weakens.
For family offices that think in decades, not quarters, this inflation-resilient cash flow can be critical. It’s not about timing the market; it’s about staying above water when monetary policy shifts.
2. Tax Efficiency Through Depreciation And Strategic Structuring
Tax efficiency isn’t a luxury for family offices; it’s a mandate. Real estate offers a rare combination: steady income with favorable tax treatment. Through accelerated depreciation and cost segregation studies, family offices can reduce taxable income on properties.
When done correctly, depreciation can shelter income from income tax, while 1031 exchanges allow families to defer capital gains and reinvest proceeds.
For high-net-worth families facing estate planning and multigenerational transfer complexities, these tools can be essential for wealth preservation.
3. Risk Mitigation Through Diversification And Control
Family offices often diversify into private equity, venture and hedge funds, but I’ve found few of those asset classes offer the visibility and control that real estate does.
Real estate investors aren’t subject to the mark-to-market volatility or headlines that erode stock valuations overnight. Investors control the business plan, the leverage, the hold period and the exit. That level of control creates predictability.
Additionally, real estate often has a low correlation to equities. In fact, during recessions, Class B multifamily housing (higher-end workforce housing) in suburban markets often outperforms luxury properties, as renters move toward affordability, yet still maintain a certain standard for their lifestyle. That kind of counter-cyclicality is an advantage many families overlook.
The Risks And Challenges
Real estate is not a “set and forget” solution. Values move in cycles, and a purchase made near a market peak may require a longer hold while prices reset. Because property sales close slowly, converting buildings to cash during a downturn can take months. Leverage compounds the pressure. Higher interest costs or tighter credit terms can erode equity if rents soften in areas facing new supply or employment losses.
Execution on the ground is equally important. Vacancies, deferred repairs and inconsistent management can drain income below projections. Extreme weather and shifting insurance markets may trigger unplanned capital spending, while new rent controls or zoning rules can narrow margins.
Even the tax tools that make real estate attractive, including accelerated depreciation and like kind exchanges, rely on current law; a policy shift could reduce their impact.
Final Thoughts: Building For The Long Game
In our own family office, real estate is the backbone of legacy planning. I’ve found it creates clarity in a complex portfolio and allows us to move through economic cycles with confidence.
At some point, every wealth creator faces the same pivot: How do I make this last? Real estate could provide a strategy for continuity. It can produce income, hedge against inflation, provide tax shelter and offer operational control. When structured properly, it can also become a platform to educate the next generation, not just on how to spend, but how to steward wealth.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?