Categories

Investing

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    5 Stories To Watch Before The Stock Market Opens Today
    The Dow Jones Industrial Average Is A Big Lie
    How High-Frequency Traders Use Dark Pools To Cheat Investors
    Key Differences Between Investing In Gold Mutual Funds And Gold ETFs
    As Soda Sales Slide, Coca-Cola’s Strategy Baffles Investors
    Why Apple Has Stopped Growing
    Activist Investor Bill Ackman Says This Book Explains His Firm’s Biggest Deal Ever
    Algos Getting Concerned Low Volume Levitation May Not Work Today
    Chinese Banks And 100,000 ‘Outlets’ Selling Gold!
    Ex-Morgan Stanley Chief Economist Admits ‘Fed Is Distorting Markets’
    Futures Flat After Six Straight Days Of Gains
    Global Share Rally Peters Out, Euro Lifted By PMI Boost
    Primark Targets U.S. With First Store Openings
    Goldman Loses Four Asia Prime Brokerage Execs To Rivals
    U.S. Justices Show Little Support For Aereo TV In Copyright Fight


    Renter Nation: The Incredible Housing Story Nobody Is Talking About

    Most people thought it might never happen, much less happen in five short years.

    The housing sector is back in the United States.

    After going through its darkest hour, people are buying houses again, and investors are making money from dividends and capital gains.

    Last month on StreetAuthority, I discussed investing in KKR & Co. (KKR) as a solid play for the single-family housing recovery. Since my article was published, the stock is up about 16 percent.

    Today I want to talk about a different way to play the housing recovery: real estate investment trusts (REITs).

    There are all kinds of REITs, from shopping centers to housing to apartment REITs.

    With even the hardest-hit markets recovering (like Phoenix and Orlando, Fla.), you might think apartment REITs would be going gangbusters. Surprisingly, that’s not the case.

    Last year, U.S. housing REITs returned 19.7 percent. In contrast, apartment REITs were ahead only 6.9 percent, according to the National Association of Real Estate Investment Trusts (NAREIT). In fact, the apartment REIT sector was the worst-performing sector in the entire index in 2012.

    So what gives?

    For starters, some investors say that since single-family homes are seeing an influx, fewer people are moving into apartments. That is causing investors to focus their attention on housing REITS.

    But that’s a mistake.

    David Lee, who manages a $3.6 billion real estate fund for T. Rowe Price, recently said this about REITs: “People believe it’s a zero-sum game, that if for-sale housing is doing well, then rentals will not do as well.”

    In fact, Lee says it’s a “win-win situation.”

    Andy McCulloch, head of Research at Green Street Advisors, which specializes in U.S. real estate trends, agrees, saying there’s a “misconception that growing momentum in the single family market will hurt the rental market.”

    So how could it be that if the single-family housing market is booming, then the apartment rental sector is also doing well? The answer comes from different projections based on how many new households will be formed between now and 2016.

    In that time, some 5.5 million new households are expected to be formed. Of these, 3.8 million, or nearly 70 percent, will be renters, says Jeffrey Friedman, CEO of apartment REIT Associated Estates Realty Corporation (AEC).

    It’s that astronomical number that has me calling America the “Renter Nation.” And it’s why I am considering apartment REITs today.

    This is just the start of the good news for apartment REITs. Those 3.8 million renters are going to be fighting with each other for less and less space.

    Let me explain.

    The uptick in new households is going so fast that demand is outpacing supply by 2.5 million apartments, according to a March report from NAREIT.

    This supply/demand dynamic could lead to increasing income for apartments.

    That, plus the 2012 underperformance of apartment REITs, makes this an opportune time to enter the sector.

    You would think with numbers like these, the financial media would cover more apartment REITs, but they seem focused on people buying single-family homes. However, you can use that to your advantage and jump in before other investors.

    If you want to use REITs as an easy way to play the surge in demand, then there are several options.

    The larger REITs such as Equity Residential (EQR), AvalonBay Communities, Inc. (AVB) and Camden Property Trust (CPT) offer yields of about 3 percent. But I just recently profiled an apartment REIT in High-Yield Investing that yields about 7 percent. (Out of fairness to my subscribers, I won’t give away the pick.)

    Risks to consider: Of course, with investing, nothing is guaranteed. A slowdown in the economy could slow the pace of new households, and rents could remain flat.

    Action to Take —> With that said… thanks to strong occupancy rates, rising rents, increasing household formation and a supply-demand gap, apartment REITs may be a good place to put some money right now.

    StreetAuthority.comP.S. — Have you heard of “Retirement Saving Stocks“? Some pay quarterly. Others pay monthly. All offer you a safer, more stable and reliable source of high income even if the market goes down. If you’re interested in learning more, plus getting the names and ticker symbols of several companies with yields up to 15 percent, click here.

    Carla Pasternak is a leading income investing expert, serving as Director of Income Research for High-Yield Investing and Dividend Opportunities. Together, these newsletters put her expertise in the hands of more than 200,000 subscribers each month.

    | All posts from Carla Pasternak

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    AT&T Ups Revenue Growth Forecast On New Pricing Model
    Comcast Seems To Be Having Its Cake And Eating It
    McDonalds Misses Revenue, Earnings Estimates: Blames Weather
    Goodbye Biotech ‘Growth Bubble’; Hello Pharma ‘M&A Bubble’
    Ukraine Currency Collapses Nearly 70 Percent Against Gold In 4 Months
    The Earnings Season: “House Of Cards”
    Why Putin Is Smiling At The Bond Market’s Blockade Of Russia
    ‘The New GM’ Seeks Court Protection Against Ignition Lawsuits
    Novartis Reshapes Business Via Deals With GSK And Lilly
    Comcast’s Profit Rises; Company Adds Video Subscribers
    Futures Flat, But Netflix Jumps In Premarket
    M&A Talk Lifts European Shares, Euro Dips To Two-week Low
    Next Batch Of Companies Hope To Raise $3.6 Billion Through China IPOs
    Netflix Plans Price Raise As Streaming Subscribers Grow
    Ford To Name Fields As CEO Soon, Replacing Mulally
    Randall Munroe Is Right About The First Amendment
    How Good Is Your Password?
    5 Top Dividend Stocks To Buy Now
    Chipotle Continues To Refine The Science Of Burrito Velocity
    BNP Banker, His Wife And Nephew Murdered In Belgium
    The Secret World Of Gold
    Anti-HFT Trading Platform Comes To “Rigged” FX Markets
    Brazil´s President Also Responsible For Refinery Deal: Ex CEO
    Futures Edge Up As Investors Await Earnings Onslaught
    U.S. Insider Trading Cases Face Test At Appeals Court
    Asian Stocks Subdued On Ukraine Caution, Dollar Firms Vs. Yen
    Kraft Recalls 96,000 Pounds Of Hot Dogs Due To Undeclared Allergen
    A Tough Sell: Insurance Against A China Financial Crisis
    Pfizer Considers $100 Billion Bid For AstraZeneca: Report
    In The Driving Seat: China’s Yuppies Are New Market Force For Global Automakers
    Read more from Investing...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.