So I usually tell you about ways to save money every week. But it’s the New Year and most people are focused are MAKING more money this year. So I want to tell you about a great way to make money every month without lifting a finger!
First off let me tell you what this is not. It’s not a paid advertisement. No one has approached me to write an article promoting their stock, product or company. What I’m about to tell you is sound information on how to make more money for you and your family. Also, this isn’t something you’ll read all the way through just to find out you need six figures in cash for. It’s a lot more affordable than that.
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Now let me tell you what this IS. It’s a bright spot in a dark industry. As you know the housing sector has been losing money hand over fist for the last four to five years. Each month there are new reports out proclaiming new all-time low sales records. It’s pitiful. So you may be surprised when I tell you about this investment in the real estate industry.
REITs, or real estate investment trusts are funds that invest in commercial real estate. They invest in shopping malls, hotels, office buildings, warehouses, and rental apartments. You can buy individual shares of REITs or invest via a mutual fund that specializes in public real estate.
The truth is REITs have been breaking sales records for the last several years, only these are the good kind. REITs have been outperforming the S&P 500 for the last three years. And they are expected to continue to make gains in 2012.
These stellar rates of return are mostly due to the utter collapse of the housing market. Foreclosures are up and single family home sales are way down. Since the housing market peak in 2006, home prices have fallen an average of 26% across the country, with some areas, like the one I live in (South Florida) achieving as high as a 55% drop in home values.
As the housing market has deteriorated, demand for rentals has risen in most areas. The total number of rental households has increased to 38 million in 2011, an increase of 1.4 million renters in the past year. In South Florida the only construction that seems to be going on is for apartment complexes and rental communities. REITs that focus on rental apartments returned 15.10% in 2011.
Most other REIT market sectors have achieved double-digit gains as well in 2011. REITs that focus on self-storage warehouses have led the REIT industry with a total return of 35.22% for the year. The health care sector was up 13.63% and the retail sector was up 12.20% in 2011 as well.
What makes REITs even more attractive is that by law they are required to pay out at least 90% of their taxable income to investors in the form of dividends. This makes REITs a source of reliable, consistent income streams for investors. You get to collect stable, monthly checks from your assets without the hassle of being a landlord.
REITs across the country are setting themselves up for even higher gains in 2012. During the last year REITs managed to raise $51.3 billion in capital. This will allow them to aggressively purchase properties in 2012, which will in turn increase the value of these REIT companies. More assets mean more profits. More profits means higher dividends for investors! Get excited!!
I am not a broker so I hesitate to tell you any specific REITs to invest in. But there is a helpful list of individual REITs that you can buy stocks of at www.nareit.org. Look for companies with relatively low payout ratios (90%) because they still have room to increase their payout ratio. Some funds payout as much as 100% of their income to investors, but there is no room for growth in those stock dividends.
And in this instance it’s better to go with Made in America funds. American REITs were the only ones to deliver positive returns in 2011. European REITs on average lost 13.38%, Middle East/Africa lost 18.20% and the Asian/Pacific regions lost 19.74%. So be proud to buy an American company as well as knowing your supporting your local economy!
Enjoy and good luck!
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Keeping Money in Your Pocket,
Nancy Patterson
