All of these should benefit tremendously from the catalysts I mentioned, and HCP isn't relying too much on any single property type.
In contrast, nearly all of Welltower's portfolio is concentrated in senior housing and other senior-specific property types. If property-specific headwinds, such as oversupply, remain an issue in senior housing, HCP's diversification should help it outperform its peers. HCP pays a 5. Although the dividend was cut a couple of years ago after HCP spun off some of its riskier assets, the company had previously maintained a multi-decade streak of increases, and I'd be surprised if that doesn't resume now that the company's repositioning efforts are largely complete.
Boston Properties is one of the largest owners and developers of office properties in the world. The company specializes in Class A top-quality office properties, and currently has a portfolio of properties with 52 million square feet of space. The company's strategy is simple -- Boston Properties develops top-quality office properties in high-demand markets not just Boston as the name implies. Developing properties, as opposed to acquiring existing ones, can be an excellent way to create shareholder value.
In short, it's generally cheaper to build a property from the ground up. This creates a better yield on cost, and also results in immediate positive equity when the property is complete. As of this writing, Boston Properties has 6. In addition to development, the company does acquire existing properties if it believes it can add value.
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Boston Properties also has a well-diversified tenant base, with no tenant representing more than 3. One of my favorite aspects of Boston Properties is its emphasis on capital recycling -- that is, continuously selling valuable assets and reinvesting in value-creating assets in order to maximize long-term returns. If you aren't familiar, data centers are commercial properties designed for housing servers and other networking equipment in a secure and reliable environment. Digital Realty Trust is a massive REIT that develops, acquires, owns, and operates data center properties all over the world.
At the end of the second quarter of , Digital Realty owned data centers consisting of more than 32 million rentable square feet of space. While this does add a certain element of risk with a less-diversified tenant base than other REITs on the list, it's worth pointing out that its top tenants are essentially a who's-who of tech leaders. So, why data center real estate?
In a nutshell, the need for secure and reliable data storage has exploded in recent years and isn't showing signs of slowing down yet. Quite the contrary -- the number of connected devices is expected to surge over the next decade or so and with the emergence of 5G technology, the volume of data that can be transmitted will grow exponentially.
To put it mildly, demand shouldn't be an issue going forward. And while past performance doesn't guarantee future results, with the catalysts I just mentioned, I wouldn't be surprised if this growth rate is sustainable for years to come. The company is one of the largest apartment owners and managers in the U. Equity owns just over properties with 78, apartment units, most of which are located in high-density urban and suburban markets.
Why does Equity invest in these specific markets? For one thing, homeownership is extremely expensive, which leads to a greater percentage of renter households. All six of Equity's markets have home prices that are significantly greater than the national average. In addition, these markets have above-average job and wage growth, which has allowed rent growth to outpace the national average. Just like Boston Properties, capital recycling is a big part of Equity's strategy. One of my favorite things about Equity is its efficiency, which is due to a combination of its scale and good management.
And, Equity's overhead is 5. In a nutshell, Equity focuses on the most in-demand rental markets in the U. The company has generated strong returns for nearly 50 years, and there's no reason to believe it won't continue to do so.
Real Estate Investing
Matt specializes in writing about bank stocks, REITs, and personal finance, but he loves any investment at the right price. Until the final regulations of the JOBS Act are finalized, only accredited investors should be investing in crowdfunded real estate unless the securities have been registered. The regulations regarding broker dealer laws, disclosures and how funds are handled are there to protect the consumer, but it is up to the consumer to do the diligence and make sure the site you are dealing with is compliant. As with any other form of real estate investing, the projected returns are only as good as the underwriting on the property.
All investing has risks and the more transparency the investor has to the specifics of the transaction, the more informed and educated they will become.
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When thinking about the sponsor, appropriate questions to ask include:. At Realty Mogul, we also require all sponsors to hold an online webinar where potential investors can ask them directly any unanswered questions about the property. Every real estate sponsor has their own specific operating agreement that covers your investment in both good times and bad.
While having real estate as part of your investment portfolio is a great way to diversify, having a variety of types and locations of real estate further diversifies your portfolio. Instead of just chasing the highest yield on equity, investors would be wise to divide their capital among a variety of real estate such as multi-family, commercial shopping centers, mobile home parks, public storage, hospitality, and office buildings.
And just as there are many types of cash-flowing properties, there are a wide variety of regional markets.
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Some areas of America are showing steady growth, while others offer less heady potential returns. Crowdfunding can be used for both investing in short-term debt and long-term equity. Investors should research multiple platforms and select their Top Three based on their investment goals and preferred user experience. That rule became effective on Sept. It has also created a new vehicle for investors to more easily access direct real estate investment opportunities.
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