FEIT’s making money depends on the economy not totally tanking. As far as I can tell, that depends on truth to the assumption that we can borrow and spend our way out of this.
I do not believe this is so. I believe we have borrowed and spent our way as far as we can go and only something different – I think sound resource management – will get us out.
Going from borrow-and -pend to sound-management means going through hard times.
In Miami we have 4 years of supply in brand new condos that nobody wants. Many will sell for pennies on the dollar. Some builders and banks will go out of business, real estate prices are still declining and will for a while. The reason? Affordability. Prices are still way beyond what people can afford ever since the wacky “affordibility products” are no longer available. Some vulture funds might do well, but catching a falling knife is tricky business. Internet stocks looked like a good buy to some after they’d fallen 50%, to some they looked like an even better buy after they’d fallen 90%. We all know how that ended.
Why weren’t the REITS that invest in apartment buildings and multi-family housing just soaring when this whole mortgage mess was going down? That is what I don’t understand. With so many people losing their homes and flocking to apartments, why weren’t these stocks such as AVB and AIV doing great? I understanding they are recovering now, but would this be a good place to put your money?? Not just REITS in general… the ones that invest in apartments.
It may be a good time to add some REITs to your portfolio as an asset class, maybe as much as 5 or 10%. Or, it may be too early …
REITs come in two main flavors: equity and mortgage. We’re all now painfully aware how risky the mortgage ones are, and the equity ones may be hiding some toxic waste, too. But, these funds won’t disappear altogether.
There are some other ways to classify REITs: commercial, industrial, residential, etc. And, there are domestic and foreign ones, too.
As an income play (as opposed to value or growth), it could be valuable. Over very long terms, REITs play like a hybrid between bonds and stocks, as you can see from doing some charting over a 1 to 10 year period by comparing them to money markets and the S&P500.
Although investment in REITs intodays market may seem like good value, investors should look to diversify into direct property holdings with push to overseas property investments. Countries like Australia that have provided stable society and have proven that their property is a long term worthwhile investment. Looking to buy in Australia, there is only one property portal that showcases in detail everything an investor needs to know. http://www.findinvestmentproperty.com.au should be a must for any investor thinking to diversify their portfolio overseas into the Australia property market.
Buying REITS in Australia may also be a worthwhile investment as many have dropped significantly in value and some are still paying high dividends.