Five ways to indirectly invest in real estate
Are you in the business of gaining profit through real estate? Through our long journey in global real estate markets, we have generated increased profits for our clients through bespoke investment strategies that include flipping homes, bulk buying or rentals.
Many of our clients often like to diversify their portfolios even further. If you are an experienced asset portfolio owner or someone who is interested in real estate but enjoys the risk of stock markets then there are plenty of alternatives you could invest your funds in.
Here we present to you 5 ways to invest in real estate through the stock market:
Investment #1: Homebuilder stocks
You might have seen their signs up all the time for new development, but did you know that homebuilder stocks are a very popular indirect way of investing in real estate. Well-established building companies have public stocks traded daily on the major stock markets. Investing in this will not mean that you won’t be affected by the changes in the real estate market since the stock price will tend to fluctuate with the rise and fall of the real estate market itself.
Investment #2: Real Estate exchange traded funds (ETF)
If you are looking for the golden mean between stock market volatility and real estate’s safety practices, then you should consider an Exchange Traded Fund (ETF). The ETF is a great way to temper the volatility since it is a basket of stocks that contain a number of similar companies in a particular country, asset class, or sector of the market. By this, you don’t have to worry about which stocks will perform better since through this option you diversify and stay on the safe side whether the market falls or rises.
Investment #3: Real Estate related retail stocks
Are you into interiors and decorations? Real Estate Related Retail stocks might be the best option for you. Big companies that supply homes with accessories, furniture and home products offer this great blend of retail and real estate. They are not extremely attached to the real estate market but they are definitely connected with it. However, even when the market is slow these stocks will still be performing since people always renovate their homes or shop for homeware.
Investment #4: Housing materials companies
Another investment route related to housing is investing in materials companies. Building materials manufacturers are at their best when a residential and commercial real estate boom is happening. The more construction is undertaken the more their stocks will rise. However, another aspect that most people usually discard is the durability of these stocks during severe weather conditions. Natural disasters, such as hurricanes, tornadoes or even extreme weather conditions such as blizzards or heat waves can soar up the stock prices. Major weather changes increase demand for building materials since buildings need replacements and restructure after the damages.
Investment #5: Real Estate investment trusts (REIT)
A really popular real estate stock investment is Real Estate Investment Trusts (REIT) which represent stocks of companies that own and operate real estate that produces income on a monthly basis. Most often these companies own commercial real estate, such as apartment buildings, strip malls, storage units, or office buildings.
Known for paying high yield dividends on their shares, REITs are mandated by law to return 90% of all profits back to the shareholders. As a result, a REIT can be paying a dividend yield from 5% to 10%. Commercial real estate in the form of nursing homes assisted living facilities, storage units or student housing are usually the best performing among stocks. As they are highly recommended for retirees, even on a mediocre performance REITs can be a great income for one’s portfolio.
Whether you are looking for price appreciation or monthly income, there definitely many options out there to indirectly invest in real estate. However, we have to tell you, nothing beats the thrill of hunting down a good property investment. If you’re still looking for a great real estate investment opportunity in either London or Dubai, Copperstones can assist you via an exclusive luxury portfolio. Benefit from our off-market listings and bespoke property searches and find the ultimate asset through us. Book your first meeting on +44 203 888 5555, 08 445 555 555.
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