REITs
I skimmed an article on REITs or Real Estate Investment Trusts.
Historically (I think, mainly from overhearing conversations) REITs seem to be looked at as a bad thing. A relative I have has invested in a REIT and everytime I heard it come up with an investment person they gave it the old “ohhh” with a shrug. Now call my crazy but with the little slump in real estate sales in the past 14 months or so, the past 10 years in real estate has had an amazing run. How the hell could a REIT do bad?
I honestly dont know the answer, someone chime in.
What I find most interesting about the article is that it is mainly talking about REITs in Europe. Thats exciting to me for two reasons. One, my wife and I have been wanting to buy real estate in Europe as a vacation home, and for the future as a retirement home. Ultimately this would be a condo in France, or Italy, VERY near the Mediterranean (a must have for us!).
The second reason is we love Europe. We have traveled their together several times. We have taken our kids with us (folks traveling that far with 4 year old twins, you gotta love where your going, or its just not worth that adventure in itself). And of course, we have been to Europe on our own, respectively. Our last couple trips I couldn’t help look at some of the coast line and think “why in the world has no one developed this?”. Our last trip, which was spent on a cruise in the UK there was an enormous amount of coastline, near major cities in Scotland and Ireland, that no one had developed, yet! With the need for more housing, and the growth of cities, and now (perhaps) foreign money, it might just happen. And I can tell you this, I would be really into a nice condo in Ireland if the price was right. We would prefer something warmer, but wow it is a beautiful place.
If you know of some fun developments let us know!
Derrik Dyka Minneapolis realtor and real estate investor
Very interesting!
In the financial planning/investment world, most advisors would say that you should buy REIT as an income driven type of vehicle. In other words, most of the clients who are in REITs are mostly retired or soon to be retired folks. With the REIT globalization and the effects of the dollar getting weaker (and expect to continue in this trend) against the Euro and Sterling (dollar was at a 14-year low against the Sterling couple of weeks ago), it makes sense to have a portion of your investable assets in Global REITs — not only to hedge against inflation but you’re also hedging currency. Traditionally, one would say that you should be concerned of the foreign interest rate fluctuation, politics, reporting standards, bla…bla… well, we got the same problems here in the US. And I’m sure Bill Gates and his analytical army figure out the pros and cons before tapping into that region long ago. We tend to be bias of our own economy and that’s natural. I’m sure the Europeans are bias of their own local growth. Bottom line is we need to look beyond our front door in regards with investing. And in the case that your desire is to own a piece of the European coastline, that’s an entirely different equation all together.
One thing to keep in mind for certain is that Private REITs are sticky assets (most likely locked in for 10 or more years which could be a bad thing) as oppose to a Real Estate Mutual Fund which is typically daily liquidity.
Now, let’s bring the real estate topic locally for a minute. We’ve seen reports that a number of people have made a nice sum of money trading real estate properties in the past couple of years. What the newspapers and magazines failed to report is that many of these folks’ get-rich-quit attempts have gone sour. Buying properties at an all time high because they gotta get into the game since a friend of a friend made out like a bandit but ending up with a hole in their wallets because they’re still sitting on these properties. Flipping properties is not a new game and it’s not dead one either. My prudent advice here is to work with a real estate professional (see http://www.derrikdyka.com) that you trust not only to find a diamond in the rough but also the willingness to give you guidance along the way. At end of the day, don’t feel bad to admit you’re not everything – we all need professionals to make us whole, whether it’s CPA for our taxes, attorneys for our troubles, and realtors for… well, you know.