HomeVestors Knows That REITs Are A Great Long-Term Investment


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Investors should consider adding REITs to diversify their portfolio and obtain long-term gains that are typical with this type of investment.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years. The company knows that conventionally held wisdom entertains the idea that investing in the stock market, in spite of frequent bumps along the way, leads to long-term positive returns as long as a competent investment manager manages those funds. This view was severely shaken during the 2008 stock market crash that accompanied the housing market crash, as a result, many investors saw dramatic slashes in the values of their portfolios. Although the markets have more or less recovered from that shock, it is nevertheless a good idea to look beyond Wall Street for safer investment vehicles. Investing in REITs is generally a safer option because they have proven to be effective at holding value and yielding positive returns over the long term.

REITs are to the real estate market, what stocks and bonds are to Wall Street. They constitute pooled funds from various investors, dedicated towards real estate investments. Just like stocks and bonds, they are publicly traded. What makes them attractive is that by law, they are required to have no less than 90% of their earnings paid out as dividends to the contributing investors. They are also expertly managed, giving investors a reason to be confident about putting their money into them. Over the past few years, investing in REITs has shown to be a better option then investing in stocks and bonds.

Using the S&P index as a model for the stock market, it is very clear to see why REITs make for better investment vehicles. From a long-term point of view, investing in REITs has consistently led to higher returns compared to the S&P. REIT dividends which constitute the majority of income earned by REIT investors, generate a generous 3.5% average return which shines compared to the S&P’s 2% or the 10 year T-note’s mere 1.5%. In addition, REIT dividends are enjoying an annual 4 to 6% growth rate and are expected to rise with an interest rate increase. REIT investments also offer excellent protections against inflation, something that stock market investments lack. General rises in the price index are normally accompanied by rent increases as well, which serve as cushions for commercial real estate investments and hence REITs.

Investing in REITs has become an almost indispensable activity for many investors and a wise investor should consider REITs as a part of their portfolio. This doesn’t mean that they should divert their entire portfolio towards REITs. For one thing, REIT earnings are taxed as normal income, unlike stock market investments that are taxed at just 15%. Experts recommend that some 5 to 15% of an investor’s portfolio go towards REITs.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties. Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community. In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction. For more information, visit www.HomeVestors.com.

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