Is There a Market Opportunity with Previous REIT Investors?
An article at seekingalpha.com, an investing site, this week is titled “Private REITs Backfire on Investors Again.” A REIT is a Real Estate Investment Trust. Investors buy shares and the REIT invests in properties in one type of REIT. Another type invests only in mortgages, not owning the properties involved. There are publicly traded and private REITS, and the principal draw for investors is a nice dividend and possible appreciation in value as well.
The article tells of the woes of recent private REIT investors who bought shares at around $10 each, and they are currently looking at a valuation of around $2.00 to $7.00 per share. Some publicly traded REITs have done pretty well, but not all by far. Cuts in the value of a REIT are usually coupled with a drastic cut in dividends as well.
Over at cnn.com, there’s an article about homeownership rates falling to 15 year lows during the first quarter of this year. The percentage of Americans owning a home dropped by a full percentage point over the last 12 months, hitting 65.4%, the lowest rate since 1997.
In that same article, the median asking rent last quarter was $721, up 5.6% from 12 months ago. In the Northeast where rents are highest, the median rent is $932. It’s a great time to be an investor, with bargain prices, tiny interest rates, and rising rents.
So, how do these two articles bear on each other? The market is great for rental property investing, and there are a whole lot of people with money who are not realizing any return on their investments. Sure, if they lost money in REITs, they may be down on real estate, but they just need to be educated and assisted as investors. They invested in REITs because they wanted to be passive real estate owners/investors. However, if you can grab a couple of them and show them how to become direct rental property owners with double digit returns and little management hassle, you could have a great customer.
An article at seekingalpha.com, an investing site, this week is titled “Private REITs Backfire on Investors Again.” A REIT is a Real Estate Investment Trust. Investors buy shares and the REIT invests in properties in one type of REIT. Another type invests only in mortgages, not owning the properties involved. There are publicly traded and private REITS, and the principal draw for investors is a nice dividend and possible appreciation in value as well.
The article tells of the woes of recent private REIT investors who bought shares at around $10 each, and they are currently looking at a valuation of around $2.00 to $7.00 per share. Some publicly traded REITs have done pretty well, but not all by far. Cuts in the value of a REIT are usually coupled with a drastic cut in dividends as well.
Over at cnn.com, there’s an article about homeownership rates falling to 15 year lows during the first quarter of this year. The percentage of Americans owning a home dropped by a full percentage point over the last 12 months, hitting 65.4%, the lowest rate since 1997.
In that same article, the median asking rent last quarter was $721, up 5.6% from 12 months ago. In the Northeast where rents are highest, the median rent is $932. It’s a great time to be an investor, with bargain prices, tiny interest rates, and rising rents.
So, how do these two articles bear on each other? The market is great for rental property investing, and there are a whole lot of people with money who are not realizing any return on their investments. Sure, if they lost money in REITs, they may be down on real estate, but they just need to be educated and assisted as investors. They invested in REITs because they wanted to be passive real estate owners/investors. However, if you can grab a couple of them and show them how to become direct rental property owners with double digit returns and little management hassle, you could have a great customer.