Can you hedge real estate?

[murray t turtle]

You have two possible options.

1) Short REIT ETFs. The following are the biggest Real Estate ETFs in the US market.

1. Vanguard Real Estate ETF (VNQ): This ETF aims to track the performance of the MSCI US Investable Market Real Estate 25/50 Index, which consists of stocks of publicly traded equity REITs and other real estate-related investments.
   
   
2. iShares U.S. Real Estate ETF (IYR): Managed by BlackRock, this ETF seeks to track the investment results of the Dow Jones U.S. Real Estate Index, composed of U.S. equities in the real estate sector.
   
   
3. Schwab U.S. REIT ETF (SCHH): This ETF from Charles Schwab follows the performance of the Dow Jones U.S. Select REIT Index, which includes real estate investment trusts (REITs) and real estate operating companies (REOCs).
   
   
4. Real Estate Select Sector SPDR Fund (XLRE): This ETF tracks the Real Estate Select Sector Index, which includes companies from the real estate industry within the S&P 500 Index.
   
   
5. iShares Residential and Multisector Real Estate ETF (REZ): Managed by BlackRock, this ETF focuses on residential and other types of real estate by tracking the FTSE NAREIT All Residential Capped Index.

2) Short various Dow Jones U.S. Real Estate Index futures on CME. These, however, are pretty illiquid, from what I know.

https://cmegroup.com/trading/real-estate.html


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Some of those pay good dividends, but seldom beat SPY or qqq;
even though today......... they may beat on downside LOL{more downside}
Cheaper than a REMax RE franchise, original cost+ monthly fee, + $100+2.5% + monthly ad fees.....
Dave Ramsey NOTED THE REIT fees tend to be TO HI.
Even a low fee like Vanguard VNQ has 3 managers + not too good on 3 years, or 10 years ;
+ maybe about right on their less than 0.5% RE development.
But an owner occupied + even little land could most likely do much better;
ReMax never passes those fees on to buyer;
95% of the properties i bought + sold for 20+ years were thru REALTORS. But based on properties, RE agents, ads, not because its a franchise.

 

[schizo]

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Some of those pay good dividends, but seldom beat SPY or qqq;
even though today......... they may beat on downside LOL{more downside}
Cheaper than a REMax RE franchise, original cost+ monthly fee, + $100+2.5% + monthly ad fees.....
Dave Ramsey NOTED THE REIT fees tend to be TO HI.
Even a low fee like Vanguard VNQ has 3 managers + not too good on 3 years, or 10 years ;
+ maybe about right on their less than 0.5% RE development.
But an owner occupied + even little land could most likely do much better;
ReMax never passes those fees on to buyer;
95% of the properties i bought + sold for 20+ years were thru REALTORS. But based on properties, RE agents, ads, not because its a franchise.

Yeah, I've never had much luck with REITs myseslf. The best bang for the buck for me was to just hire a few handymen and do a fixer-upper.

 

[long]

from someone that owned many commercial and residential properties, developer and owner of a national brand real estate franchise. having made more than lost on real estate, it was a total waste of time compared to trading.

whatever type of return you wish to make on a land deal is far eclipsed by what can be pulled out of the market with dependable reoccurring results.

The property I’m looking at wouldn’t be a true investment. I just want it. That’s not to say that I’d never sell it if the price was right.

 

[vanzandt]

DTLA commercial properties taking a 50% haircut in 13 years. Union Bank Plaza sold for 208 in 2010 and sold for 104 this year. AON prop took a 45% haircut in 9Y.

It depends where it is, but I doubt raw land can get hit that much. Unless the market has just gone nuts and it's way overpriced to start. If it's on the outskirts of a thriving metro, it may drop a little, but in time it'll bounce back. It's hard to say without knowing more about the property though.

Either way, if he buys it and keeps it, his grandkids will be happy someday.

 

[MarkBrown]

Either way, if he buys it and keeps it, his grandkids will be happy someday.

i thought the same thing, but didn't work for me.

i own less of everything now than ever. i get a kick knowing i could buy anything i want at asking price and make the paper "someone else opposite my trades" pay for it. that is a feeling like no other.

making due and conserving what i have would be like conceding that you can't produce more than you have.

 

[destriero]

Bently.

 

[The_Krakenite]

Wouldn't the best hedge, still be to just buy Blackstone? The only problem is at the CEO's age, you risk Schwarzman being replaced by some diversity hire who then leads the company to woke-broke.

I think one of their best hedges was during the height of TGFC housing disaster. He bought IIRC Vornado? REIT at much higher evaluations than he believed it should be (had to in order to win)... and in a very unorthodox move, sold half of it THE VERY SAME DAY.

People thought divesting/hedging it was totally nuts (housing boom would go on forever, well didn't you know?). Yet, it turned out very well for Stephen!

 

[Cabin1111]

Former farmer/Realtor here. My family had different farms over the years. We owned 40 acres in California...Near a small town. My grandfather bought it back in 1932 for $129. in back taxes. They grew grapes on it.

It was sold to my brother and I in the 1970's. The town was growing...We sold 18 acres for subdivision and I bought out my brother's half. I farmed almonds on it while I waited for the city to grow.

Over the years, I paid to have the land brought into the city limits. Through a recession, I was still gaining income from the old rental on the farm and the almonds.

I sold it in 2003...Bought a rental then never looked back.

If I was a young investor this is what I would do (solo, not a large partnership/LLC). I would buy 5-20 acres in Ohio...Close to a small town that is growing. Maybe a town 20 minutes from where Intel will be building their new plant. Rent it out cheaply to a local good farmer...Hold it though recessions.

When the time is right and housing demand is great, sell to a developer. You could even allow for payments to be made for a couple of years (carry a note, to reduce taxes all in one year).

Just my thoughts.

 

[long]

Former farmer/Realtor here. My family had different farms over the years. We owned 40 acres in California...Near a small town. My grandfather bought it back in 1932 for $129. in back taxes. They grew grapes on it.

It was sold to my brother and I in the 1970's. The town was growing...We sold 18 acres for subdivision and I bought out my brother's half. I farmed almonds on it while I waited for the city to grow.

Over the years, I paid to have the land brought into the city limits. Through a recession, I was still gaining income from the old rental on the farm and the almonds.

I sold it in 2003...Bought a rental then never looked back.

If I was a young investor this is what I would do (solo, not a large partnership/LLC). I would buy 5-20 acres in Ohio...Close to a small town that is growing. Maybe a town 20 minutes from where Intel will be building their new plant. Rent it out cheaply to a local good farmer...Hold it though recessions.

When the time is right and housing demand is great, sell to a developer. You could even allow for payments to be made for a couple of years (carry a note, to reduce taxes all in one year).

Just my thoughts.

This sounds great if you’re paying cash upfront. The scenario I linked to was financing the land and he is looking for a way to hedge a catastrophic black swan event that could drop the appraisal value by more than half in the short term. Something like the housing crisis did.

 

[murray t turtle]

Yeah, I've never had much luck with REITs myseslf. The best bang for the buck for me was to just hire a few handymen and do a fixer-upper.

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THAT could still work well, +also with cash land or low debt land also;
unless someone's name was Harvey Weinstein or Jeffry Epstein .
Or unless its a HI crime area/Hi tax area