Dj Van Keuren | Co-Mgr Member Evergreen | Founder Family Office Real Estate Institute | President Harvard Real Estate Alumni Org.
In the world of wealth preservation, real estate carries an enduring power and permanence. Stocks fluctuate, businesses pivot or dissolve and cash erodes with inflation, but well-selected real estate can appreciate and provide steady income. Because of this, for many high-net-worth families and family offices, real estate is often viewed as a legacy vehicle.
Through my time in the real estate investment and family office space, I’ve seen that while real estate may not offer the flash of tech unicorns or the rapid returns of venture funds, for high-net-worth families and family offices, it often plays a critical role in a long-term wealth strategy.
The Appeal Of Real Estate Investments
The Psychology Of Permanence
One of the core drivers of real estate’s appeal to investors and families is tangibility. Unlike paper assets, real estate offers something physical, visible and rooted. This permanence can create emotional resonance. Children and grandchildren can walk through a property, visit tenants and see the direct impact of their family’s investments.
Cash Flow And Control
Beyond sentimentality, real estate can offer a financial utility that aligns well with multi-generational planning. Well-managed properties can provide portfolio diversification, stable cash flow through rent, tax benefits via depreciation and 1031 exchanges, asset-backed collateral for future borrowing or reinvestment and optional liquidity events through refinancing or sale.
Real estate can also allow investors and families to retain control over the asset and its impact. You can control the timing of exits, how aggressive you want to be with leverage and what kind of tenants you want in your properties. Control also enables alignment with family values, whether that’s a preference for sustainability, community development or workforce housing.
Sustaining Generational Wealth
Legacy rarely builds itself. Real estate is how many convert earned wealth into enduring wealth. For instance, a founder who sells a business can redeploy the proceeds into income-producing property. Over time, those assets become the backbone of a family office, with income supporting future generations and equity appreciating slowly. It provides something steady while the next generation finds its footing.
A Teaching Tool
One often overlooked benefit of real estate is that it can be a useful teaching platform. Involving next-gen family members in real estate decisions, even at a small level, can help instill financial literacy, analytical thinking and leadership. You can teach a teenager what an internal rate of return is using real estate. Have them help model a deal, visit a site or talk to a broker.
This hands-on education also creates accountability. I believe heirs who manage real estate are less likely to see the family fortune as an endless ATM. Instead, they can begin to see the hard work and strategy that goes into maintaining, not just making, wealth.
Lessons For Family Offices
For family offices, it’s important to distinguish between trophy real estate and generational real estate. The former—private jets, luxury homes, resort condos—might reflect success, but they don’t always create lasting value. The latter—stabilized income-producing assets in strategic markets—can preserve a family’s standard of living and expand opportunities for the next generation.
That doesn’t mean all real estate is created equal. Family offices today face a more complex market than ever. With economic uncertainty keeping interest rates above 4%, remote work trends and generational shifts, old assumptions are being challenged. But rather than pulling back, offices can evolve their strategies. For example, family offices could explore secondary markets with better yield and growth potential, boutique-branded office or co-living models, balancing core income properties with opportunistic plays or creating real estate investment trusts—like entities inside the family to professionalize governance.
Legacy Real Estate: Six Strategic Risks Family Offices Must Manage
For family offices, navigating the risks that come with real estate is not optional; it’s essential. In today’s evolving market, the difference between building a legacy through real estate and suffering loss lies in proactive strategy and disciplined execution.
Here are six core risks—and how family offices can turn them into opportunities:
Concentration Risk
Too many portfolios lean heavily into a single property type, location or operator. That familiarity can backfire. A downturn in one sector can create outsized losses. Family offices can establish a real estate investment policy statement (IPS) to diversify across markets, asset classes and sponsors.
Illiquidity And Misaligned Time Horizons
Real estate isn’t liquid. Capital may be tied up for years. This can create tension, especially among generations with different expectations. All stakeholders must be educated, particularly next-gen investors.
Regulatory And Tax Uncertainty
Tax law changes—whether to 1031 exchanges, depreciation or carried interest—can quickly upend long-standing strategies. Families should conduct annual legal and tax reviews. Familiarize yourself with structures that aim to support agility, such as tenants in common (TIC), Delaware Statutory Trusts (DSTs) or umbrella partnership real estate investment trusts (UPREITs), for example.
Operator And Sponsor Dependence
A great property can still underperform under the wrong operator. Many families get caught chasing “hot” deals without truly vetting the teams behind them. To offset this, build a sponsor diligence process.
Generational Disengagement
The next generation may feel disconnected from the real estate holdings that built their family’s fortune. Without involvement, poor decisions or even full liquidation can follow.
A good solution is bringing younger family members into the conversation early. Invite them on site visits, and include them in investment committees.
Market Volatility
The days of low interest rates and easy money are gone. Rising debt costs, tighter credit and refinancing risk now define the real estate landscape.
Family offices should stress-test every deal. Lock in fixed-rate financing where possible and assume cap rate expansion, not compression.
Final Word
Real estate isn’t just an asset; it’s infrastructure for legacy. It can generate income, store value and anchor family identity—if family offices approach these investments thoughtfully and account for risks. The most successful investors don’t treat it as a transaction. They treat it as a long-term platform for wealth, stewardship and purpose.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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