Residential real estate is hot right now – and apartment owners are making money hand-over-fist. But don’t worry, I’m not going to recommend you run out and buy an entire complex.
Instead, I’ve got three apartment REITs you can buy from the convenience of your computer (or phone, for that matter!) for yields up to 7.3%.
Rents are now so high nationwide that no one person making minimum wage for 40 hours a week can afford to rent a two-bedroom apartment – a fact driven partly by low minimum pay, but also rising rents.
Not all REITs in the space are buys, of course.
Some “blue chip” equity residential names such as Equity LifeStyle Properties, Inc. (NYSE:ELS) and AvalonBay Communities Inc (NYSE:AVB) have soared into the stratosphere, and their valuations have become stretched and their yields have dropped to around 3%. In fact, ELS’ yield is just barely beating out the 10-year T-Note right now!
Meanwhile, mortgage REITs like AGNC Investment Corp (NASDAQ:AGNC) throw off sizzling yields that can reach into the double digits, but many are at risk of dividend cuts, and rising interest rates will continue to threaten their spreads.
Quality income opportunities in residential real estate are shockingly sparse, but there are three players — yielding up to 7.3% — that are worthy of consideration at the moment.