In today’s fast-paced and ever-changing world, real estate has always been a cornerstone of investment for many individuals. With the advent of new technologies and innovative business models, the landscape of real estate investing is rapidly evolving. In this exclusive interview, we sit down with Jesse Prince, the CEO of HappyNest, a groundbreaking platform that is revolutionizing the commercial real estate investment industry. Jesse shares his vision for the future of real estate investing and how HappyNest is paving the way.
Jesse has always been passionate about real estate investing. With a background in finance, a master’s in real estate from NYU, and years of experience in the industry, he noticed a significant gap in the market – a lack of accessible, user-friendly platforms for everyday investors. Driven by his passion for real estate and a desire to democratize the investment process, he founded HappyNest, a platform that makes investing in real estate as easy as investing in stocks.
What is HappyNest?
“HappyNest is a fintech startup that offers commercial real estate investment opportunities to retail investors, with a focus on millennials and Gen Z. The platform allows users to invest in real estate funds with as little as $10 and offers unique features like a round-up program that lets users invest their daily transaction round-ups into shares of the fund. HappyNest’s mission is to make real estate investment accessible and inclusive for all while providing a seamless and user-friendly investment experience,” says Prince.
Historically, commercial real estate investments were only accessible to those who could afford to purchase properties independently. Traditional real estate investments necessitate a down payment or a significant lump sum, making it difficult for young or new investors to enter the market. However, commercial real estate assets have outperformed the stock market for decades. HappyNest provides a solution to this problem by offering investors an opportunity to access this lucrative market. As a shareholder, you become a partial landlord of these exceptional assets, and you will receive quarterly dividends from rental income. Furthermore, shareholders will benefit from any increase in value our properties experience.
The future of commercial real estate investing
According to Jesse, “The future of real estate investing lies in making the process more accessible and empowering individual investors.” He envisions a world where technology and data-driven insights enable investors to make well-informed decisions about their investments. In this future, barriers to entry will be significantly reduced, allowing people from all walks of life to participate in real estate investing and build wealth.
Jesse also believes that sustainability and social impact will play a crucial role in the future of real estate. As the industry evolves, he sees a greater emphasis on environmentally friendly and socially responsible investment opportunities. HappyNest is already working towards this vision by carefully selecting properties that adhere to high sustainability standards and support community development initiatives.
How does HappyNest help me become a commercial real estate investor?
With HappyNest, you can become a real estate investor with a low buy-in amount of just $10. It is one of the lowest minimum investments of any real estate investing platform on the market.
HappyNest’s investment portfolio consists of a diverse range of real estate assets, including net leased retail to national tenants, mixed-use properties, multi-family developments, real estate lending funds, logistics facilities, and properties leased to tenants in the cannabis industry. The investments are located across the United States, with a focus on strong logistics locations, growing populations, and thriving industry sectors.
HappyNest’s investment strategy seeks to provide principal protection while achieving attractive returns through a variety of strategies, including property value growth, rent growth, and effective asset management. HappyNest’s recent sale of a CVS property with a 15% IRR in just over two years is a testament to the effectiveness of its investment strategy. Overall, HappyNest’s portfolio offers a unique and well-rounded investment opportunity for those seeking low volatility returns, current income, and downside principal protection in the real estate industry.
Our easy-to-read blog provides useful explanations of investment strategies, allowing users to invest in premier commercial real estate for just a few dollars at a time.
How to get started investing in commercial real estate with HappyNest
HappyNest is undoubtedly at the forefront of the future of real estate investing. With its innovative platform, dedication to accessibility, and commitment to sustainability and social impact, the company is poised to make a lasting impact on the industry. Download our app and start your journey to financial success. Set realistic savings goals, choose the amount you want to invest, and start growing your nest egg.
As 2021 draws to a close, we’re looking ahead for our annual real estate market predictions, 2022 edition.
There are two big variables that could impact how things might play out. First, whether the prices of lumber and building materials that have spiked over the past year will correct, continue at elevated levels, or possibly even continue to climb.
The second factor is whether or not the Federal Reserve will do anything about high levels of inflation and raise interest rates.
So far, there haven’t been strong indicators that they will. As such, the following real estate market predictions for 2022 assumes fiscal policy and commodity prices will continue in the same trend they are now – upwards.
Here are HappyNest’s five real estate predictions for 2022.
1. The housing market will continue to see double digit growth
After an unbelievable year that saw appreciation rates nearing 20% on the tail of 2020’s 7% gains, people began to wonder if perhaps we are in a housing bubble.
We’re probably not. The reason is that much of the influx of demand that came into the market is investment institutions (hedge funds, banks, etc.).
While the mainstream media claims it’s Millennials entering the market, this is simply not true. First of all, there is always some organic turnover as young adults reach their home-buying years. Millennial have been very delayed in this regard. After a decade of setbacks, those entering the housing market for the first time represent a minority of buyers. Additionally, many of them are buying as couples – even friends are teaming up – as homeownership would otherwise be unattainable.
The Federal Reserve has kept interest rates as 0% since the onset of the pandemic. That money is lent out to big banks. This money finds its way into various investment vehicles – hedge funds, private equity, etc. – who have been buying up houses like hotcakes. Earlier this year, Zillow accidentally over-purchased almost 7,000 homes.
However, the Fed’s low interest rates aren’t being passed onto consumers. While mortgage rates are low, the criteria around who can get mortgages in the first place has tightened.
Bank lending multiples have declined significantly over the last decade. Now, the average mortgage lending multiple is about two and a half times the borrower’s income. Less than five years ago, it was about four times the annual income of applicants with good credit.
With the Fed’s printer still humming and interest rates still near zero for banks, there’s no reason to think they will cease buying up houses, adding a steady stream of demand side pressure and driving up prices in the housing market.
2. The Industrial and Logistics sector will have exponential growth
Our real estate market prediction for 2022 is the industrial and logistics sector will continue its exponential year-over-year growth.
The massive growth in e-commerce that started accelerating aggressively at the onset of the pandemic has held strong through 2021, as we predicted. As of right now, there’s no discernible reason to think that trend will slow down in 2022.
Filling all those online orders requires big industrial shipping facilities, much like HappyNest’s flagship property. Currently on a 10-year lease with FedEx, the real estate market outlook for this sector is so promising, rent increases are already in the lease terms.
The warehouse market has seen tremendous growth, and trucking remains the primary domestic transportation route. As retailers continue to scale up their e-commerce activities, the demand for these limited-supply properties will drive prices even further up. There have already been reports of warehouse lease rates soaring due to skyrocketing demand. Every one of those warehouses will need semi trucks to deliver the stock to retailers or consumers, therefore the need for industrial properties sustaining or continuing its appreciation is all but guaranteed.
HappyNest’s industrial property is in a strategic location for nationwide operations. It is located in Fremont, Indiana. It is nestled between three major interstate in America’s heartland for maximum efficiency.
3. Office real estate will improve, but not recovery fully from the pandemic
One real estate market sector that might experience growth on a year-over-year basis is the office sector. However, that growth will only partially recover from the dive the sector took from the onset of the pandemic. That’s because a huge portion of the remote work force doesn’t want to return to the office.
For that reason, a year-over-year perspective doesn’t provide the scope needed to understand this corner of the real estate market.
Because since then, several large-scale companies have announced that they will not require large portions of their workforce to return to the office at all. Additionally, small and mid-sized businesses appreciate the financial lift off their operational overhead now that they’ve worked out the logistics of running their companies remotely.
With an influx of supply and reduced demand, out real estate market prediction for the office space sector is a reduction in rates to seduce companies into leases and recondition them to the 9-to-5 work life the pandemic interrupted.
With new virus variants creating some uneasiness around calling the workforce back into the office, this sector may find themselves with vacancies on their hands long-term. Buildings whose zoning support it may find a different use cases, such as an AirBnB, housing, or hotel conversion.
4. Investment capital will continue to sweep into all sectors
With the Federal Reserve keeping interest rates at zero, thereby making lending capital to banks and financial institutions all but risk free, more investment capital will flow into all real estate sectors.
Considering the back drop of high inflation levels, keeping cash on hand is somewhat of a liability for banks. No where is this better evidenced than the Federal Reserve’s reverse repo market. The use of the fed’s reverse repo is at all time highs – and on an eye-popping exponential curve.
Real estate has long been a hedge against inflation. Continuity of current policy is the Federal Reserve implicitly encouraging large financial institutions to buy up assets in quantity. From financial institutions’ perspective, while capital is available at 0% interest rates, why not keep adding assets to their balance sheets?
The reality is, in light of the tremendous double-digit gains in several real estate sectors (notably, the housing market and industrial sector), even what would usually qualify as a major correction wouldn’t fully undo the gains since 2020.
Until the Federal Reserve signals a meaningful change in policy, such as raising interest rates or pulling cash out of circulation, it is our real estate market prediction that the real estate market at large will continue to see increased demand in all sectors.
Compounded with the private sector’s strong interest in real estate and you’ve got a recipe for big pumps. Investors want to be on the right side of that.
5. Migrations and mass relocations will have regional effects
Ever since the major shutdowns of 2020 that have meaningfully reshaped the workforce and untethered former office workers from their workplace, some cities are experiencing major exoduses while others are experiencing major influxes.
Austin, Texas in particular has seen tremendous growth. In 2020, Austin’s population grew by almost 3.5%. Partially thanks to Elon Musk, Austin’s population is on track to gain another 3.6% in 2021. Several large companies, including Apple and Google either have plans to move or expand operations through 2022.
Of course, the people moving to cities like Austin and others that are experiencing growth are coming from somewhere. Notably, all three companies with plans to move to Austin are currently headquartered in the Greater San Fransisco Bay Area. This exodus of thousands of jobs is already being felt in Bay Area real estate prices.
Likewise, Boise, Idaho has experience tremendous growth over the last two years, and housing prices have followed suit. Major metropolises like New York City and Chicago have experienced population contractions.
Large-scale population shifts will be felt asymmetrically across the nation as supply-demand dynamics change on a regional level.
HappyNest’s real estate market prediction
As our final real estate market prediction, HappyNest remains confident in its portfolio performance for 2022 and beyond. We remain well fortified against the uncertainties in the times ahead. Properties in our portfolio will presumably remain in demand as well as appreciate. We are not anticipating any vacancies. With strong, financially stable tenants on long-term leases, we expect rent income to continue uninterrupted for the foreseeable future.
We look forward to sharing the wealth and paying out to HappyNest shareholders in the form of quarterly dividends and property value appreciation.
Wishing you a happy holiday season and a prosperous New Year from all of us here at HappyNest.
Peter Lynch, a multi-hundred millionaire investor and Fidelity investment manager, has been vocal about his leading investment philosophy: Invest in what you know.
Many investors look up to Warren Buffet. He is widely considered one of the greatest investors of all time.
He echos Lynch’s sentiment: ‘Don’t invest in a business you can’t understand.’
Whether that be drawing on your professional experience or your observations as an every day consumer, understanding what companies offer and how they make their revenue is step one in effectively vetting potential investment opportunities.
You’re probably aware that CVS is a shopping center staple with a national presence. You know that FedEx has had tremendous growth over the last decade; perhaps its role within your own life has grown. With the rise of e-commerce, you probably also can understand why the services of shipping companies like FedEx are becoming ever more central to the functioning of our shape-shifting economy.
Think outside of the stocks
Sure, you could invest in these companies by buying shares of them in the stock market.
Or you could leverage their success, stability, and growth prospects by investing in the critical infrastructure these businesses need to operate.
We own a portfolio of commercial and industrial properties and lease them out to the likes of CVS and FedEx.
By buying shares of HappyNest, you become a partial owner of these properties. You’ll also become a partial landlord to these Fortune 500 companies. As a shareholder, you’ll get a slice of the rental income and enjoy the value appreciation of our properties.
Best of all, you start building your personal passive income stream.
HappyNest’s portfolio consists of in-demand properties with tenants you know
It’s not hard to see that the demand for the properties in our portfolio is unlikely to wane anytime soon.
Industrial shipping property in Fremont, Indiana
Consider our industrial shipping center based in Fremont, Indiana. With the rise of e-commerce, facilities like these are already rapidly appreciating in value, and are projected to see exponential growth.
And that’s just to support current demand.
But it’s hardly the end of the e-commerce sector’s growth. Current forecasts estimate 30% expansion or more by 2024.
That makes it hard to imagine a property like this will struggle to find tenants or face value depreciation.
Commercial retail property in East Hampton, MA
Our portfolio also has a commercial retail asset. This 8,775 square foot property is located in East Hampton, Massachusetts.
While the commercial retail sector experienced market volatility in recent years due to the pandemic and social distancing, our property is home to a CVS pharmacy.
Because many pharmacy offerings require in-person consultations, business operations in this sector have fared moderately well through lockdowns. We haven’t experienced any interruptions in rent and don’t expect to with this well-established tenant. CVS still has twelve years left on the active lease.
The long-term nature of the lease, and considering our estimations for this property’s value appreciation during the lease period, the rental rate on this property is on a five-year tiered plan.
Every five years, the rental income will increase. CVS has already accepted these future rent raises as part of the contract. These scheduled rent increases amount to approximately a 10% bump every five years.
Those rent increases will be trickle back to HappyNest shareholders in the form of higher rental yields.
Translation: Revenue growth is already in the signed contracts.
HappyNest likes to keep things simple
Here at HappyNest, we strive to streamline our own operational costs so that value add and revenue can be passed right on to our investors.
One advantage we have is that though the properties in our portfolio are high value, they generally require one tenant. That means we don’t have to invest time and resources to continuously fill vacancies as an apartment building or shopping complex might require. It also means less fluctuation in dividend payments based on vacancy rates and overhead.
We prefer to keep things simple and consistent. As we look to add to our portfolio, we consider the property’s long-term prospects, what kind of companies and industries would be interested in that property, and select for the best combination of high value and lowest management overhead possible.
Less paperwork. More dividends.
When you invest in HappyNest, you invest in what you know
HappyNest is a strategic approach to ‘invest in what you know.’ It’s thinking outside of the box and finding ways to invest in valuable, stable companies outside of the stock market.
If you agree that e-commerce will probably continue to see healthy growth in coming years, you can probably see why we think industrial shipping centers won’t fall out of fashion.
If you agree that many pharmacies will continue to require in-person visits for many of their offerings, you’ll probably be on the same page with us regarding reliable demand for properties like ours.
It’s not too hard to understand that managing one or two tenants per property is easier than managing many.
Having tenants like FedEx and CVS is also a major advantage, because the outlook for these major corporations over the next few years suggests they will have no problem making rent. We bet most people never considered that they could become the landlords of Fortune 500 companies. But with HappyNest, they absolutely can.
Grow your yields as we grow our portfolio
As HappyNest’s collective investing base grows, we will use our pooled capital to acquire more properties.
Your principle capital investment is reinvested into more assets, expanding your portfolio, tenants list, and dividend income. Brick by brick, you’ll be steadily building your financial future and making your money work for you.
Warren Buffett, the Oracle of Omaha, says: “If you don’t find a way to make money while you sleep, you will work until you die.”
But as HappyNest’s portfolio grows – and whenever corporate America’s rent comes due – you’ll be sleeping like a baby.
REITs have consistently ranked among the highest return investments over time, which is why they have been an investor favorite for decades.
Real estate is a historically high-performing investment
In fact, over the last 30 years across ten different investment classes, REITs have taken the
#1 spot for highest returns eight times – more than any other asset class. For those years that they didn’t snag the #1 spot, they ranked second or third an additional six times.
This year proved to be a rough one for REITs, closing out at a net loss. But smart money knows that a down year can also be a prime entry point. After all, the goal is to buy low, sell high.
For the capitalist who sees the opportunity where others see obstacles, here’s the 360 on all things REIT.
What is a REIT?
REIT is an acronym for Real Estate Investment Trust.
In a nutshell, they are companies that pool investor capital to invest in real estate or real estate products. The gains on these investments are in turn distributed among shareholders.
REITs were defined and passed by Congress in 1960 under the Cigar Excise Tax Extension.
The idea was to give average Americans – who might not have the means to buy more than one property – the opportunity to take part in and enjoy the fairly consistent gains from real estate investments.
The act outlined requirements to qualify as a REIT under law. REITs are incentivized to meet these conditions through tax advantages. The big fish reward is that the company does not have to pay corporate taxes if they meet REIT qualifications.
No corporation wants to pass up tax breaks. They’d rather hit these key numbers than rendezvous with the IRS come springtime:
Percent of total assets invested in real estate, cash or U.S. treasuries. Also the percent requirement of revenue generated from real estate-related income such as mortgage interest rates, rent on property, or profit on real estate sales
Amount of taxable income that is paid out to shareholders – a nice perk for investors, courtesy of Uncle Sam. HappyNest intends to pay out 100% of its net income to shareholders.
The maximum amount of shares that can be held by 5 people or less. Coupled with this requirement is that within the first year of an REITs formation, it must have at least 100 investors in the pool.
Unlike many investments, investing in REITs typically produces regular income in the form of dividends generated from rent or mortgage interest payments.
2. Investing in REITs is accessible to the average person
While it would be great to be in a financial position to buy numerous properties and collect rent monthly, for most people, that’s simply not financially feasible.
REITs offer the ability to participate in real estate investing without having hundreds of thousands of dollars at the ready. With real estate investment apps like HappyNest, for example, investors can buy in with as little as $10.
Compared to traditional real estate investment property, buying into and selling out of most REITs is easier and more streamlined and requires a lot less paperwork.
4. Hands-free management
Ask any landlord and they’ll tell you – managing properties is a lot of work. Between filling vacancies, managing tenant requests and complaints, and building maintenance, a lot of time and money can go into the administrative side of real estate.
REITs handle the operational side of real estate investments, so investors can skip the 3 a.m. calls about plumbing issue emergencies.
Although it may seem difficult to understand all there is to know about investing in REITs, let’s start with the basic building blocks.
Remember in biology class when your teacher covered taxonomy trees? You know, kingdom, phylum, class, order, family, genus, species, etc.?
No? Okay, well, pay attention this time – there’s money on the line.
There are several categories…of categories…of REITs. Very meta, we know.
To make things a bit more digestible, it might help to start with a visualization, then get into the nitty-gritty.
If REITs were a taxonomy hierarchy, they’d look something like this:
Every REIT has a ‘class,’ ‘order,’ and ‘family’ component.
For example: American Tower Corp is a publicly-traded (class), equity-based (order) REIT that primarily manages telecommunication infrastructure sites (family) around the world.
Breaking Down The REIT Taxonomy Hierarchy
Class: Investment acquisition strategy
REITs can be categorized by how they accrue capital for different forms of real estate investing.
They fall into three main categories: Publicly traded, public non-traded, and private.
Publicly traded REITs trade on stock exchanges like the NYSE. Anyone can buy a slice of a real estate portfolio whenever they want.
High degree of transparency
Registered with the SEC
Ability to generate a high amount of investment capital quickly
Easy to buy and sell (highly liquid)
Able to be grouped into ETFs. This means the value of the REIT’s share can be affected by the performance of other REITs and sectors as opposed to solely on the performance of the underlying portfolio.E.g.: If a REIT has a strong year but is grouped with low-performing REITs in ETFs, the REIT’s performance will be adversely impacted.
An REIT can be public without being traded on a stock exchange like the NYSE.
HappyNest falls into this category. Though anyone can buy shares of our portfolio of properties, the shares are not listed on the NYSE or anywhere else. We see this as an advantage – and 2020’s bottom lines back us up.
This year, the value of the properties in our portfolio appreciated. But not every sector of the real estate market was quite so lucky.
Had our REIT been publicly traded on exchanges, it’s likely it would have been grouped into other REIT ETFs. Because of this grouping, our returns would have been smaller. It’s the stock market equivalent of “guilty by association.”
Instead, our performance is tied directly to and only influenced by the appreciation of the properties in our portfolio, all of which gained this year.
Registered with the SEC
Performance of investment tied to underlying asset value alone – insulated from swings in the market at large
Ability to quickly raise capital from investors since anyone can buy in
Not bought and sold as quickly (less liquid)
Less transparent, harder to tell share value
*(HappyNest does not charge for broker commission of platform fees)
Information provided to the SEC may not be independently verified
Private REITs are not listed on exchanges and not offered to the public. As the name implies – they aren’t open to everyone.
Private REITs are not required to register with nor report to the SEC. More often than not, they are only offered to “accredited” investors, otherwise known as very wealthy people that can take the kinds of financial gambles and hits that would put the rest of us on the streets.
Though private REITs have produced higher returns than publicly traded ones, they come with significant risk. Without an SEC registration, there is little to no oversight on their performance and operations. That makes these kinds of REITs particularly susceptible to fraud.
Management fees can be high and unsubstantiated. Investors must put their full trust into the board of trustees.
Potentially higher returns compared to traded REITs
Partially insulated from stock market fluctuations
Lack of transparency
Must be “accredited” investor
*net worth of $1 million, not including primary residence or income of $200K+
Not registered with the SEC
High management fees
Can require long holding periods (low liquidity)
Class: Type Of Asset Managed
The ‘class,’ (in our REIT taxonomy hierarchy) is the type of real estate assets managed by that REIT. These primarily fall into two categories:
An equity ‘class’ REIT owns real estate investment properties. The REIT manages, buys and sells, or collects rent from those properties.
They generate income and profits via market appreciation of their assets. That could include things like rent payments from properties they own outright or a rent payment that exceeds their own mortgage payment on that property.
For example: An REIT buys a property for $100,000. Their mortgage payment is $1,500 a month. They are able to rent it out for $2,000 a month. That $500, minus overhead expenses, is profit for the REIT – 90% of which must be paid back to shareholders by law.
Mortgage-based REITs provide capital to borrowers much like a bank does. They generated returns via interest paid by the borrower during repayment.
Unlike the ‘order’ (investment acquisition strategy) which is either/or, asset types can be diversified within an REIT.
Two Harbors Investment Corp, for example, engages in both mortgage-backed securities as well as owns a portfolio of properties. Its income is generated by a combination of rent, asset appreciation, and interest paid on mortgages it holds.
Family: Real Estate Sectors
Lastly, within the real estate market, there are sectors.
Examples of real estate sectors include:
The sector in which a REIT operates can have a huge impact on the bottom line, and the performance of each sector can vary year over year.
A retrospect of 2020 demonstrates just that. As millions of workers across the world were sent to work from home, office buildings and retail storefront worldwide stood empty as leases lapsed and were not renewed.
As a result, office REIT’s year ended with a net loss of almost 20%. Around this time last year, office REIT investors were celebrating 30%+ returns.
Meanwhile, e-commerce demand skyrocketed. In May of this year, even fast shipping MVP Amazon had to remove non-essential items from its 2-day prime delivery schedules.
All that demand meant the need for shipping fulfillment centers, part of the industrial sector, increased significantly. HappyNest has an industrial property in its portfolio, currently leased by shipping logistics company FedEx, that is enjoying this appreciation.
Choosing The Right REIT For Your Investment
At the end of the day, every investor wants to protect the value of their investment and gain a little alpha along the way.
Though 2020 wasn’t the best year for REITs as a whole, some sectors thrived. Even for those that didn’t, as the old saying goes: Buy low, sell high. The dip in performance could prove to be a great entry point. REITs have historically outperformed stocks and other asset classes consistently.
“Compound interest is the 8th wonder of the world.” – Albert Einstein
Many investors are flocking to real estate investment trusts (REITs) because they’re considered a relatively safe and high-yield investment. Some dividends can be 10% or higher and offer the potential for capital appreciation.
Approximately 89% of real estate investors indicate that they will make another investment soon. They also reported compound interest can help them achieve their financial goals faster.
Here’s what you need to know about compound interest and how it applies to REIT investing.
What is Compound Interest?
Compounding interest is the concept that your money makes you more money over time when the interest compounds on your original investment and interest earned. Compounding interest creates a snowball effect that can accelerate the value of your investment.
For example, if you invest $1,000 at an annual interest rate of 10%, you will have $1,100 at the end of year one. If you leave the interest earned ($100) and the original investment ($1,000) in your account and earn another 10% in year two, you will have $1,210 at the end of year two.
Fast forward 30 years, while continuing to earn 10% annually and not making a withdrawal on your account, you will have $17,449.4. Conversely, if you decided to withdraw the $100 interest earned every year for 30 years, you would have only received $3,000 in interest (30 years x $100) and still have just $1,000 in your account. In this scenario, the effect of compounding interest generated more than four times the amount of money compared to making annual withdrawals.
How Can You Use Compounding Interest to Your Advantage?
Compounding interest takes patience but is not difficult to use to your advantage. Most REITs and brokerage platforms offer a dividend reinvestment plan (DRIP). By enrolling in a DRIP, you are reinvesting your dividends back into the REIT or stock that you own. Over time, you will own more shares of the REIT or stock. The dividend payments will become greater (assuming consistent dividend payments over your investment period). When you redeem your shares in 5, 10, 15, or 30 years, you will see the fruitful effects of compounding interest.
Why Does It Matter?
If you don’t harness the power of compound interest, you may be cutting yourself short of your actual earning potential. Non-accredited and passive real estate investors are already generating a massive amount of wealth using the power of compounding interest by investing in REITs with DRIPs.
If you’re looking to maximize your investments’ value, compound interest can help accelerate your portfolio’s growth over time. To learn more about compound interest, speak with one of the professionals at a commercial real estate investment company. Ask them how you can reach your financial goals faster by harnessing the power of compound interest.
Real estate investment trusts are a companies that owns, operates, or finances properties. The properties can range from homes to hotels, malls, offices, medical buildings, or any other real estate type.
Investing in REITs can be a great way to generate passive income and build wealth through real estate. Perhaps that is why nine out of 10 investors add real estate to their investment portfolio. If you want to diversify where you put your money to grow it steadily over time, you can buy shares of a REIT.
Of course, you might be thinking that your portfolio is already diverse, with a mix of stocks and bonds. Why add REITs into the mix? There are several reasons.
REITs Can Be Affordable Ways to Get Into Real Estate Investing
Let’s say you want to invest in real estate. That’s a great goal, but it might take a lot of capital to get started and purchase a property substantial enough to generate cash flow. After all, if you are only beginning your real estate investing career, you’re probably going to purchase just one property at a time.
Rather than wait until you have enough property to start seeing regular returns, you can use an app for investing in commercial real estate and jump right into the REIT world. No-fuss, no muss, and it’s economical, too.
REITs Can Generate Steady Income Streams
As you may have heard, real estate tends to outperform the stock market over the long-run. A real estate investment trust often provides dividend distributions, that can then be reinvested through dividend reinvestment plans (DRIPs). By reinvesting your dividends back into the REIT, you are purchasing more shares of the REIT. That increases you future potential dividend payouts.
When it comes time to start reaping the benefits of your investment, you could potentially realize a significant stream of income. And that’s good for your retirement years.
The Stock Market Has Less Effect on Public Non-Listed Real Estate Investment Trusts
Are you concerned about stock market volatility when it comes to distributing and managing your investment portfolio? Public non-traded REITs tend to fluctuate in value less than other publicly traded REITs and stocks when the market takes a tumble.
Although no investment is entirely immune to market swings, public non-traded REITs are more closely aligned with a pure-play real estate investment and can be less volatile. If your risk profile leans toward taking fewer chances, download one of the best investing apps and look into a public non-listed REIT.
Professional Management Teams Oversee the Commercial Real Estate
Let’s say your friend tells you he’s buying up tons of commercial property for sale in the area and wants you to be an investor.
Sounds good–in theory.
In practice, your arrangement could end up a nightmare, especially if your buddy isn’t a smart money or property manager.
Real estate professionals manage REITs. This means that they’ll treat your investment like you would, with care and diligence.
The SEC Has Oversight of All Types of REITs
If you choose to invest in a publicly traded or public non-traded REIT, you have the SEC overseeing financials of the REIT. In other words, you don’t have to wonder if the REITs are in compliance. They must legally follow SEC regulations. If they don’t, they risk losing their REIT status and could run into legal trouble. This provides you with security that you may not get investing in private equity or a private REIT.
Your desire to invest in real estate, even if you can only invest in real estate with $500 or less, makes sense. Over the past 20 years, Real estate investment trusts have proven to be the right fit for investors of all ages, from Generation Z to Baby Boomers. Download a real estate investing app today and have fun exploring the wide world of REITs.
For a more in-depth article on the details of real estate investment trusts, read more here.