Best Value Equity Real Estate Investment Trusts Stocks to Buy in 2022
You can invest in real estate via equity REITs and real estate stocks. Both give you exposure to real estate without having to deal with the headache of directly owning a property. You don’t need to be a landlord or even a property manager to own real estate as an investment. These investments are great ways for small-time investors to make money from properties without needing any large sums of money upfront. These trusts and stocks are great for anyone looking for solid long-term returns on their investments, but they’re not for everyone. Before investing in equity REITs or real estate stocks, here is everything you need to know.
NexPoint Residential Trust (NXRT)
NexPoint Residential Trust is a REIT that specializes in single-family rental homes. This REIT is unique because it has a substantial portion of its equity in fixed-rate mortgages. This means that the interest rate payments have already been set, so the company will not see any fluctuations in its cash flow because of rising or falling interest rates. This REIT is also well-positioned to benefit from the aging population. As the population ages, more people need to rent, either because they can’t afford to buy or because they’re looking to downsize and don’t want to pay off a mortgage. Single-family rental homes are also attractive because they’re not cyclical like the stock market. If the economy goes into recession, the demand for single-family homes will drop, but the need for rentals won’t.
Camden Property Trust (CPT)
Camden Property Trust is a real estate investment trust that invests primarily in commercial real estate. The REIT invests in everything from retail to data centers and healthcare properties. Camden Property Trust is a great REIT to buy if you want to invest in real estate without being tied to a specific property type, such as single-family homes. As a retail REIT, this trust is well-positioned to profit as online sales increase. Online shopping will increase as millennials age, and e-commerce is a very appealing option for older generations, typically on a fixed income.
Weyerhaeuser Company (WY)
Weyerhaeuser Company is a forestry company. Forestry stocks are notoriously volatile, but WY has proven to be a good investment over the past two decades, with an annualized return of 12% since 2000. Forestry is an industry that is hard to predict, but WY has a significant portion of its business in engineered lumber, which is used in construction. As the country continues to grow, demand for lumber will increase, and so will WY’s profits.
Equinix (EQIX)
Equinix is a data center REIT. Data centers are physical locations full of servers that store information for cloud services like Amazon Web Services, Microsoft Azure, and Google Cloud. As more and more services are moving to the cloud, there’s a need for more data centers and real estate to house them. Equinix is a high-quality data center REIT that has increased in value by at least 10% every year for the past ten years. However, there are a few caveats to consider before investing in EQIX. First, it will take years for this investment to pay off, so it’s not a good choice if you’re looking for quick returns. Second, data centers deal with much uncertainty, such as extreme weather events and cybersecurity threats.
Conclusion
The equity REIT and real estate stock markets are both robust and long-term investments. These markets go through cycles like any other market, but they always recover and give you real estate exposure without the hassle of directly owning a property. If you’re looking for a long-term investment, equity REITs and real estate stocks are great options. They’re not for everyone, but they will give you exposure to the strong real estate market.