Real Estate And REITS As An Investment

It’s really nice in times of volatile markets like now to have an asset class that may zig when traditional stocks and bonds zag. An asset with low correlation to others in your holdings can both reduce risk at the portfolio level and increase returns.

Real estate is an important asset class, and the source of enormous wealth. Unfortunately, it’s not an easy one for most investors to gain access to.

Individual real estate properties meet none of the usual tests for market efficiency: Each parcel is unique, transaction costs are very large, sales occur only occasionally, and market knowledge is often local and restricted, making this an insider’s market. Most transactions are private, so detailed knowledge of rent rolls, replacement costs, deferred maintenance, and other critical data is not widely known. Liquidity can be nonexistent, and the smallest possible purchase unit can be above the means of many investors….read more

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