This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Is real estate really the 'best' investment?: 7 undervalued REITs

James Dennin, Kapitall: Buying real estate can secure fat returns, but it also poses greater risks. Are diversified REITs the answer? 

An interesting article in  Vox this morning about the virtues of investing in real estate poses the controversial question "Is buying a house a better investment than buying stocks?"

Their answer, quite simply, is "only if you're rich."

That's because a lot of real estate in the world really does offer higher returns than you can get pretty much anywhere else. London real estate for instance, has grown in value 5.3% in the last  three months alone.

Read more from Kapitall: What are some of the virtues of dividend-free value stocks?

Compounded that's a more than respectable 20% for the year, almost double what the S&P usually returns over that same period. Buying real estate also requires less expertise than picking stocks (assuming you have enough capital to buy valuable real estate in the first place).

On the flip side, of course, investors are hard pressed to diversify risk in real estate. An S&P index fund can track dozens of companies – if not more – with a lot less capital. For instance, the largest SPDR S&P 500 ETF (SPYtracks 501 companies in all the major industries. You get can a piece of all 501 for about $180 bucks a share. 

Your house, on the other hand, can become worthless overnight in the event of a natural disastor, or if the neighborhood takes a turn for the worse. In fact, not counting tax incentives, real estate can be a pretty risky proposition. 

Real estate investment trusts (REITs) offer one way to capture the returns of real estate investing while also adding a degree of diversification. They buy and maintain real estate assets and distribute profits to shareholders through dividends, which are often quite high. 

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.79 0.10%
FB $101.98 0.07%
GOOG $682.32 -0.12%
TSLA $150.99 0.35%
YHOO $27.04 1.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.55 +35.47 1.94%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs