Tags: Investors | REITs | real | estate

Experts: REITS Are the Best Real-Estate Play for Most Investors

Sunday, 04 Nov 2012 03:47 PM

By Dan Weil

Individuals who want to invest in real estate have a choice between hard assets and real estate investment trusts, or REITs. All but the most wealthy would be better off just sticking with REITs, many experts say.

Only investors with a net worth of $10 million or more should consider actual properties in addition to REITs, Tim Courtney, chief investment officer at Exencial Wealth Advisors, told The Wall Street Journal.

REITs are more liquid, generally carry less risk, and take a fraction of the time commitment of tangible real estate. In addition, the return from real properties can take much longer to realize than that from REITs.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The FTSE NAREIT All REIT Index has gained more than the Standard & Poor’s 500 Index in each of the past four years.

But that strong run-up has pushed U.S. REITs to pricey levels, making international REITs more attractive, Courtney says. Some of them sport dividend yields of about 5 percent.

As for U.S. REITs he and other experts recommend buying an index fund, which includes a basket of REITs, to get diversification.

One way to do that is through exchange-traded funds (ETFs). Vanguard REIT Index ETF (Ticker: VNQ) is the favorite of Morningstar analyst Abby Woodham. She also likes iShares Cohen & Steers Realty Majors (ICF), iShares Dow Jones US Real Estate (IYR), and SPDR Dow Jones REIT ETF (RWR).

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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