The Role of a Real Estate Investment Firm in the New Economy

Posted by Chris Clothier on Tue, Sep 18, 2012

real estate investment firm new economyIn today's changing economy, the definition of smart investment choices is changing. According to one recent news story, the expected annual yields for investors in the stock market is significantly lower than it has been over the last century. Rather than returns close to 10 percent, investors can expect closer to an average of five percent yields in the forseeable future. 

As a result, investors need to rethink their investments if they want to build a more secure financial future. One investment expert recommends a portfolio that includes real estate investments such as real estate investment trusts. Some REITs can be more volatile than others, which can result in lower yields but also in much higher yields.  REITs also come with other disadvantages that are often lost on investors such as the inability to direct what the REIT will invest in and the lack of REITs that invest in single family homes.  Added to the fact that investors in REITs only own a piece of paper and not a physical property, REITs add up to one way to invest in real estate that does not make sense for many of today's real estate investors.

According to John Gerard Lewis, "Yes, REITs have been throwing off double-digit total returns over the past few years, but that doesn't mean they always will. An investor will have to review and perhaps update any investment portfolio from time to time. This theoretical portfolio is no different."  Taking John's statement and reflecting on the disadvantages of investing in a REIT instead of deeded, single family real estate, I would say a REIT could be more trouble than the return is worth considering the advantages of single family real estate.

Owning Single-Family Homes as Rental Property

Memphis Investment Cash Flow PropertyAs you consider your investment options, one reliable real estate investment is one in rental property. Some investors are intimidated by this idea, but you don't need to be a handyman or an expert in marketing to be successful. Just find a reliable real estate investment firm to help you purchase, remodel, and manage your property or properties. With a good firm, you can relax and reap the benefits of your investment while someone else takes care of the details.  Single family properties is a growing trend among investors and continues to grow as a profitable piece of many investors portfolios.  Some of the main advantages of purchasing single-family homes for your portfolio are the fact that you have deed to the property, not a piece of paper showing you own a share of a property.  The other main advantages are the depreciation factor and the opportunity to have a paying tenant make your payment each month.  this reduces your principal and allows you to capture cash flow and tax advantages.  Neither of which come with a REIT.

A real estate investment firm can even allow you to invest in properties in a city other than your own. When you do buy investment properties in another city, choose an area with low housing prices and high demand for quality rental housing, along with a strong job base. Two such cities are Memphis, Tennessee, the home of Fed Ex, International Paper, and many other companies and Dallas/Ft. Worth, Texas, home to $19 privately held Billion dollar companies as well as 25 Fortune 500 world headquarters and one of the fastest growing cities in the U.S.

 

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Topics: Memphis Invest, real estate investing, REIT Investing