The Houston Association of Realtors has asked county officials to include real estate on a forthcoming list of essential services so closings on $800 million worth of residential real estate transactions scheduled in the next 10 days can go through. The county today ordered residents to stay home to avoid exposure to the coronavirus.
HAR President and CEO Bob Hale spoke during Harris County Commissioners Court’s Tuesday meeting, citing $2.4 billion in overall pending closings, the realty group said in a statement.
Whether or not real estate sales and leasing transactions are included in the county’s final order, HAR said it is developing a platform to allow agents to host and post virtual open houses and conduct virtual showings.
On Friday, the association’s board decided to block notices of open house events on its consumer website.
“We appreciate that many folks want to continue conducting real estate business, but HAR, along with the Austin Board of Realtors, believes this is the most responsible and health-conscious way to operate at this time,” Chairman John Nugent said in a Friday press release.
The Texas Association of Realtors has also created a COVID-19 Addendum document providing for a 30-day extension of a closing date in a residential sales contract if the closing cannot occur due to a voluntary or mandatory COVID-19 quarantine or closure.
In addition, HAR is waiving third-quarter Multiple Listing Service fees for all subscribers who are current with their second-quarter payments.
Coronavirus updates: Stay informed with accurate reporting you can trust
Forget Real Estate Investments, Buy REITs! – The Motley Fool Canada
With the stock market crashing and interest rates tumbling, now seems to be as good a time as any for real estate investments.
However, investing in real estate isn’t the only method of generating passive income — buying REITs is just as good, or better, depending on the investor.
Real estate investments
Of course, there’s no denying the earnings potential of a good real estate investment.
In theory, you simply front the down payment, charge more for rent than you pay for the mortgage, pocket the difference and eventually sell the house for much more than you bought it for.
However, there are a lot of finer details and things that can go wrong along the way.
For one, you have to be able to afford the down payment. Even if the housing market cools with a recession, a 20% down payment is still going to be at least $50,000-100,000 — depending on the area of course. This hurdle can take a lot of investors out of the running right away.
Now, even with the down payment covered, there can be a lot of issues surrounding renting the property out. Staging and showing the place, carrying out repairs, footing bills, property tax, and so on and so forth. These things simply eat away at your time and your bottom line.
So, in order to avoid these types of issues, REITs can be preferable to traditional real estate investments.
Advantages of a REIT
REITs generally don’t require a minimum investment, as they trade just like a stock. So, you needn’t worry about being able to put six figures down from the onset.
As well, when you buy into a REIT, you’re not going to be directly managing any property. You won’t be responsible for going out and fixing a busted fridge or finding a new tenant.
You simply invest your money with the REIT and they take care of all of that.
Disadvantages of a REIT
Obviously, you don’t have control over the properties the company chooses to buy. It’s therefore important to choose REITs that align with your investment philosophy from the beginning.
As well, you generally aren’t going to make a ton of money on your principal investment with a REIT. While the monthly income you can generate is quite substantial, REITs tend to just bounce around in price rather than outright grow over time.
So, come time to sell, you’ll more or less be getting your principal investment back, whereas someone making a real estate investment will generally sell for more than they bought for.
Choosing a REIT
Most of its real estate investments are in the retail space, with a small but growing portfolio of other properties.
While its main focus is not on residential, but rather retail property, Choice is still well positioned to succeed in the near term.
This is because its retail locations are anchored by Loblaw, Canada’s largest grocer. Thus, Choice’s income and stability should be secured as Loblaw should continue to perform well as a vital service provider for Canadians.
Currently, Choice is trading at $12.87 and yielding 5.75%. At that yield, an investment of $20,000 would generate $100 a month in passive income.
Real estate investment strategy
Before making a real estate investment, consider whether it’s the best action for your situation. Under some circumstances, investing in a REIT can be a far better option.
As far as REITs go, Choice is one of the most stable options for Canadians, as its anchored by its main tenant, grocery giant Loblaw.
Many investors fear market crashes. However, long-term investors should embrace this crash, because bear markets can potentially allow you to make millions. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
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How Do Real Estate Valuation Metrics Work? – Baystreet.ca
For real estate investments, the metrics used to quantify how certain properties or portfolios/Real Estate Investment Trusts (REITs) are valued are different than the typical valuation metrics used on most conventional stocks on the TSX or S&P 500, for example.
This is because real estate has unique characteristics to that of operating businesses in the sense that real property tends to be long-term, bond-like physical assets with a “coupon”-like cash flow structure, most of which is paid out to shareholders (REITs tend to have payout ratios in the 90%+ range).
For REITs, assessing Net Operating Income (NOI) rather than earnings in the norm, with a REIT’s NOI representing rental/lease revenue less operating expenses.
A REIT’s cap rate is the yield an investor receives on a given property, and is equivalent to the NOI of a building dividend by the value of the building.
Lower cap rates mean higher building values, so comparing cap rates across REITs with similar geographical/property type mixes can tell an investor which portfolio of properties may be undervalued relative to each other.
Vacancy rates are another important metric to assess knowing how full a given portfolio of properties is, on average, relative to the overall market can tell an investor if said properties are well managed or not.
Invest wisely, my friends.
Real estate industry taking precautions during COVID-19
Jason Yochim, CEO of the SRA, holds a conference call with agents three times a week to share news, advice and protocols.
“With no more open houses, we’ve advised our agents on what we call essential sales activity,” he said in an interview. “For example, if I want to move to that bigger house I’ve always wanted, maybe now is not the time to do that.”
On the flip side, some people need to move. Life changes such as divorce, or settling an estate, or moving for employment purposes are considered essential housing transactions, Yochim noted.
“We’re guiding our members that way. We’re (also) encouraging them to utilize technology for showings, whether it’s Facebook live or virtual tour products.”
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