Opportunities are out there in real estate investment

8/10/2012 | Real Estate Blog

Since the economic slowdown, there has been a pullback from real estate investing, but things have recently begun to pick up in real estate. Even the likes of Warren Buffet are noticing the trend and taking advantage of it.

At present, commercial real estate makes up only about 3 percent of funds in investor’s portfolios, but many investors are now rethinking how they can increase their real estate exposure so as to participate in the improving market.

One way to break into real estate is to invest in Real Estate Investment Trust funds, known as REITs. These funds invest in property and generate profits as dividends, which are a stable source of income. In selecting a portfolio for REITs, commercial real estate is currently a good way to go, particularly healthcare properties. REITs hold property directly and receive more hands-on attention from managers compared to other investment vehicles. Compared to other major economic markers, REITs are performing better than average.

Investing in home builders is another avenue to take. One could invest in an exchange-traded fund (ETF), or look into specific home-related stocks figured to have the most room for growth over the next handful of years.

There is also some opportunity for profit in direct purchasing of properties. These investments can be tricky, and involve having to deal with extended vacancies, deadbeat tenants, and maintenance and insurance expenses.

Real estate development and real estate investment often go hand in hand. Development is essentially an investment, and many obstacles can come up in the process. Working closely with an attorney to solve these problems can be immensely helpful.

Source: Wall Street Journal, “Is the Real-Estate Rebound for Real?,” Joe Light, August 3, 2012