Building a good investment portfolio requires diversity! This is likely to be the first piece of advice anyone new to the market will hear. Diversify! While you can forge into the real estate investment world on your own, it is wise to turn to the mentors in your life for input. You may instead wish to seek professional guidance.
Let our real estate professionals at Tristate Holdings 167 Inc. help you understand the factors involved and what you can expect when considering all of the factors and calculations for real estate earnings in your portfolio.
For example, which areas of real estate should you decide to invest in? What can you expect when it comes to average annual returns? How long can you expect to be invested before seeing your returns?
We will cover the returns on real estate and what you can expect to realize through these investments.
Returns on Real Estate – What You Can Expect
There truly is a great selection of opportunities in this market to contemplate.
There are basically two categories of real estate in which you can expect to earn returns on real estate, commercial or residential.
Another option we can help you explore are real estate trusts (REITs).
Exchange-traded funds which are based on the real estate sector should be explored, along with mutual funds.
There are also mutual funds and exchange-traded funds available that track the real estate sector.
Despite the up and down trends of the market, the National Council of Real Estate Investment Fiduciaries (NCREIF) found private commercial properties have a track record that nearly equals the success of the S & P Market over a 25 year period through March of 2019.
Returns on Investments
While it can be extremely daunting, returns on real estate investments can be rewarding. The key to these goals is to be aware that these investments take plenty of time, patience, and money. Good things do take time when you’re building future returns on real estate, you can expect them to grow over a long term period. Patience is key when it comes to earning an average annual return. Any investment takes constancy in order to come to full fruition.
Let our real estate professionals help you understand what you can expect when you are considering all of the factors and calculations for real estate earnings in your portfolio.
Some of the variety of options available for consideration are securities, stocks, and bonds. Opportunities for investment should also be strongly considered in the arena of real property. Whether you’re diversifying with single-family homes, multifamily housing, mobile homes, land, retail, industrial or mixed-use, we’re here to help you realize your long term investment goals.
You may even wish to consider tax lien certificates. In addition, the real estate market offers exchange-traded funds (ETFs).
Average returns are affected by multiple factors including the percentage of your investment in any given sector of the market.
Over a 25 year period of investments in the private commercial property sector, it was found that returns gave the S & P 500 a close run for the money, by the National Council of Real Estate Investment Fiduciaries (NCREIF). In a report released on May 9, 2019, these investments provided an average annual return of 9.4%. The data used was through the period ending in March of 2019.
Now, coming in ahead of these figures were investments that were diversified in real estate as well as residential, at an average of 10.5%.
Tied with these returns, also earning an average of 10.5% were real estate trusts (REITs).
S & P 500 Index
The past two decades have shown an average return of 9.8% on the S & P 500 Index. Comparing this to the real estate investment sector, including the market collapse of 2008, it’s apparent that given educated consideration, you can expect to earn similar returns on investments.
The real estate investment sector includes commercial or residential properties and within either are many opportunities, from single-family homes, undeveloped land, apartment or shopping complexes as well as commercial office properties. You can invest directly into these properties or take the option of stocks and bonds from real estate companies. Tracking the real estate market, mutual funds, and exchange-traded funds (ETFs) should also be considered.
A quick track to diversification is REITs. Just as regular stocks trade, these securities trade on an exchange. Offerings include mortgages, property, property management companies, or a variety of these. There are tax benefits and investment advantages to explore. Specially regulated, REITs make a good overall investment, with liquidity and diversity.