When stocks and traditional investments are volatile, when investors don't know from day to day how the markets will move, real estate is a good best. That doesn't mean you should move all of your money into real estate. Rather, you should diversify your portfolio to include real estate, which tends to be a good hedge against inflation and volatility. Below are four types of real estate investments that are hot right now and ripe for consideration by the investor ready to diversify his portfolio.
- Industrial – PwC recently published a white paper detailing the best real estate investments for 2017. In the white paper, the authors say that “sector allocation has shifted into defensive mode.” What real estate sector does better than industrial as a defensive strategy against economic downturns? According to PwC, industrial real estate ranks near the top of real estate investment classes right now, and the two sub-sectors that outpace all others are fulfillment and warehouse investments. With the rise of e-commerce and more retailers migrating their operations to online fulfillment, this is not surprising.
- Multi-family – It's been widely reported that millennials are owning their own homes less than previous generations. That alone makes multi-family properties a hot market to get into. But there's something else to consider, as well. Mara Poling recently entered the multi-family crowdfunding space. That's more than just a good sign. When traditional financial institutions back it, it usually means there is a solid trend developing. With the rental market on the rise, multi-family housing is a good place to allocate some of your assets. PwC says student housing and age-restricted housing are the hottest markets, presumably because they target the two largest living generations.
- Retail – Retail hasn't exactly been performing well in recent years. That's not a downside, however. Warren Buffet built his fortune buying when everyone was selling. PwC says urban/high street retail and community shopping centers are the trend to watch.
- Medical Office – Fifth on PwC's list of investment prospects for the commercial and multi-family sub-sectors next year is the medical office category. Falling behind industrial fulfillment, warehouses, urban/high street retail, and age-restricted housing, medical offices are expected to slightly outpace urban/high street retail in developments. As Baby Boomers get older and the Affordable Care Act (or some Trumpian variation) integrates more medical consumers into the pipeline with mandated insurance programs, medical facilities are a growing necessity. The PwC white paper says, “Health care is one of the highest growth areas of the US economy, with job growth of nearly 19% since 2007.” Medical offices associated with a major successful hospital are even more popular. There is a lot of room for specialization in the medical office sector, which makes it an excellent choice for investment.
Why Real Estate Crowdfunding Can Help You Reach Your Investment Goals
The good news for investors is that you can find projects that fall into each of these categories within the real estate crowdfunding (RECF) sector. RECF usually offers higher returns and lower fees than traditional investment classes, which makes it attractive for investors serious about growing their income.
Another benefit to RECF is that it allows investors the opportunity to partially fund projects they are interested in. In fact, with real estate crowdfunding, this is the norm. Outside RECF, it's not uncommon to find projects that require a total investment. If you do have partners, they are often hand-selected by the project sponsor, which puts control in the hands of the sponsors rather than the investors. By using marketplace lending platforms to fund their projects, sponsors give investors more control over their money and more choice in the types of deals they are willing to support.
RECF is a category of marketplace lending that provides investors with more varieties of opportunity with more potential for higher returns. If you're ready to diversify your portfolio, look into RECF opportunities for the above-mentioned asset classes.
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