Displaying items by tag: real estate

While nontraded real estate investment trusts (REITs) have faced another challenging year, financial advisors are seeing a rise in sales of alternative investments overall. By August, financial advisors sold $76.6 billion of illiquid alternatives, including nontraded REITs, business development companies (BDCs), interval funds, and private placements. 

This amount matches 2023's total, with projections indicating the industry will surpass $115 billion by the end of 2024. Sales of nontraded REITs have notably decreased to $4.2 billion in the first eight months, compared to their peak of over $33 billion in 2022. 

However, BDCs have overtaken REITs as the most popular alternative investment sold, with $23.7 billion in sales through August. Blackstone Inc. leads in nontraded REIT and BDC sales this year.

Finsum: There is still an elevated risk premium built into most non-treasury rates right currently but REITs could see a bounce back with that falling soon. 

By 2040, adults retirement age are expected to make up 22% of the U.S. population, creating new investment opportunities in sectors catering to an aging demographic. One promising area is medical outpatient buildings (MOBs), which are increasingly in demand as healthcare systems shift toward outpatient care to provide more flexible services. 

A notable example is KKR & Co.'s partnership with Healthcare Realty Trust, which has already committed nearly $500 million to acquire and develop MOB properties. 

While Healthcare Realty Trust has faced challenges, including tenant bankruptcies, it has made strides in improving its financial stability and expanding its portfolio. With favorable demographic trends and a focus on outpatient facilities, the company may have a strong runway for future growth despite current market volatility.

Finsum: This is innovative thinking and could prove a useful way to invest in healthcare.

Investors are increasingly turning their attention to the real estate sector as the Federal Reserve signals a potential shift toward lowering interest rates. Over the past month, five major U.S.-listed real estate ETFs have collectively seen net inflows of $2.2 billion, a figure that accounts for more than half of their total inflows over the last year. 

This surge in capital reflects growing confidence that the real estate sector stands to benefit from anticipated lower borrowing costs and a more favorable economic environment. 

Fed Chair Jerome Powell recently hinted at the Jackson Hole Symposium that rate cuts could be on the horizon, driven by signs of a cooling labor market and progress toward the 2% inflation target. As a result, ETFs like the iShares U.S. Real Estate ETF (IYR) and the Vanguard Real Estate ETF (VNQ) have seen substantial inflows, reinforcing the sector’s strong recovery and positioning it as a key beneficiary of potential monetary easing.

Finsum: Focus on REITs with single family rental performance, because corporate real estate is still dependent on hybrid/work from home policy.

Real estate has long been a cornerstone of wealth creation, but the responsibilities of being a landlord can be daunting. For those seeking passive income without the hassle, REITs like Realty Income Corp. offer an appealing alternative. 

Known as “The Monthly Dividend Company,” Realty Income has a history of reliable payouts, currently offering a 5.59% dividend yield. However, REITs do tend to fluctuate more than underlying rents.

Investors looking for more direct involvement without the landlord duties might consider platforms like Arrived, which allows fractional investments in rental properties, combining monthly income with potential property appreciation. Both options provide avenues to invest in real estate without the headaches of property management.

Finsum: As interest rates fall yield seekers might consider real estate as an option to generate income, with fluctuations in equities markets. 

Investors remain concerned about how inflation could affect their portfolios. Despite the Federal Reserve's efforts, inflation remains elevated, making it a good time to consider adding inflation hedges to your investments. Here are three top inflation hedges to protect your portfolio:

1. TIPS (Treasury Inflation-Protected Securities): These U.S. government bonds adjust their interest rates with inflation, providing a reliable safeguard for bond investments.

1. Floating-rate bonds: These bonds adjust their payouts with rising interest rates, offering protection against inflation. You can access them through ETFs or mutual funds for added diversification.

1. Real estate: Investing in a house with a fixed-rate mortgage can hedge against inflation. If a house directly isn’t possible SFR or REITs are great options. 

Avoid long-term fixed-rate bonds and cash savings as they lose value in real terms during high inflation.

Finsum: Inflation still remains above the official Fed target and with a potential slew of cuts coming, inflation could spark again.