With stock markets concerning investors today, some people are looking at investing in real estate.
The real estate market in British Columbia has seen some positive numbers and have people on Vancouver Island wondering if this is a good time to invest in real estate.
The challenge is that once you invest in the real estate, deciding to sell may not provide you with instant liquidity. In addition, investing in real estate in other countries adds additional tax concerns as well as local laws.
Global real estate funds offer several benefits to investors including:
- Diversification – Real estate securities have a low correlation with other equity investments.
- Attractive risk adjusted returns – Real estate and real estate securities have been one of the best performing asset classes.
- Inflation hedge – Real estate is known to offer a hedge against inflation for investors.
- Expanding asset class – Most pension plans today hold real estate securities to diversify their holdings. Do you in your portfolio?
- Strong cash flows – Real estate must have a strong cash flow to attract investors, not just in Canada but also around the globe.
- A more efficient investment portfolio – Adding global real estate funds to a diversified portfolio could increase portfolio efficiency by lowering the volatility and creating diversification.
Real Estate Investment Trusts (REITs) are an efficient way for many people to invest in commercial and residential real estate companies.
As an investment, REITs combine the best features of real estate and stocks, giving investors a practical and effective means to include professionally managed real estate in a diversified investment portfolio.
If you invest in them, pick a mutual fund that invests in REITs instead of just one. They are subject to ineptitude on the part of management just like any company's stock, so diversification is important.
However, they are considered a conservative investment, with long-term returns similar to common stocks of other industries.
If you're looking to invest in real estate, learning more about REITs and global real estate funds may help you become a better real estate investor.