Tags: Profit | real | estate | rebound

How to Profit from the Real-Estate Rebound

Wednesday, 08 Aug 2012 04:40 PM

By Dan Weil

The real-estate recovery appears to have begun in earnest. Home prices jumped 6 percent in the second quarter from the first – the biggest gain since 2005, according to CoreLogic.

Big-time investors, including Warren Buffett, have plunged into the real-estate sector. So how can individual investors piggyback on the trend?

The Wall Street Journal has three suggestions – homebuilder stocks, real estate investment trusts (REITs) and purchasing homes or apartments to rent them.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

Homebuilder stocks have rebounded smartly from their 2009 lows, but are still far below their 2005-06 highs. You can invest in a group of homebuilders through an exchange-traded fund if you want diversification at a low cost.

As for REITs, they have been on a huge roll for the past 3.5 years and have now returned to their January 2007 peak. But some sectors can still rise substantially.

Morningstar analyst Philip Martin is bullish on healthcare REITs, thanks to the growing demand for medical services.

As for owning homes or apartments, you can still buy them on the cheap in many cities, but remember that renting them out can be a tricky thing.

Barry Vinocur, editor of REIT Zone Publications, told Moneynews that real estate should make up 10 to 15 percent of an individual investor’s portfolio.

And when it comes to REITs, “they have proven to be consistently good performers over the last 10 to 15 years,” besting stocks and bonds, he said.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

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