REITs Beat Condos Every Time
Looks like those of you that prefer paper over bricks and motar, might be on to something. The latest anayslis by the Financial Post proves that if you were to hold your assets in paper Real Estate holdings you'd actually do better financially than if you put that money into the bricks and motar tower skyscraper investment. I've always had a feeling this was the case, but there is also something to the idea that it's nice to hold something that's real and solid. But at the same time, Warren Buffet didn't get rich by holding onto a lot of motar assets. His strategy is buying what's behind the bricks and motar, and that's the payoff the Financial Post seems to be coming to with it's article here.
Looks like those of you that prefer paper over bricks and motar, might be on to something. The latest anayslis by the Financial Post proves that if you were to hold your assets in paper Real Estate holdings you'd actually do better financially than if you put that money into the bricks and motar tower skyscraper investment. I've always had a feeling this was the case, but there is also something to the idea that it's nice to hold something that's real and solid. But at the same time, Warren Buffet didn't get rich by holding onto a lot of motar assets. His strategy is buying what's behind the bricks and motar, and that's the payoff the Financial Post seems to be coming to with it's article here. | ניהול נכסים | |
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That’s the conclusion of Michael Smith, a real estate analyst at Macquarie Equities Research, in the fourth annual installment of his study comparing a REIT investment in the apartment sector to a condo investment. The REITs are still way ahead.The Toronto-based analyst compared the returns of a Calgary condo to Boardwalk REIT, which is based in the city, and Toronto condos to Canadian Apartment Properties REIT, which is based in that city. He has now looked at five investment periods.
Over a Five year Period, the Condo investment returned about 10.4% per year, however the REIT's weighted average return over that same period was closer to 75%. Now that's what I call getting your money's worth out of an investment. The assumption made in the analysis was that the condo purchase was leveraged and a 900 square foot condo was used as the example.
For income he used the actual distributions of the REIT over the time period and for the bricks and motar he used the CMHC market Rental report. For capital apprication he used the Royal Lepage House Price Survey. However he didn't include the transaction costs of purchasing a condo or a REIT. Something that would have tipped the returns even greater to the favour of the REIT. As the cost of purchasing a condo can be quite burdansome as most of you realize. The transaction cost of purchasing a share of a REIT in comparison are almost next to nothing.
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