I own a home. Isn’t that enough real estate exposure?

TOD Index featured on the APA Planning Webcast Series
August 26, 2017
What’s the Future according to Prudential?
September 2, 2017
Show all

I own a home. Isn’t that enough real estate exposure?

The TOD Index is committed to helping people understand value that real estate can play in building wealth. View our data here.

If you are thinking of investing in real estate, you need to understand the value of Transit Oriented Development (TOD) and how in the coming decades it could benefit your own portfolio.

Have you ever said to yourself or someone else: “I own a home. Isn’t that enough real estate exposure?”

Many investors own a home, which they believe provides adequate exposure to real estate. In reality, however, single-family home ownership is quite different from income-generating real estate investments.

First, people buy homes because they need shelter, and for personal reasons related to family, neighborhoods, schools with new portable stages for student presentations, and even tax deductibility. A home does not generate income, but rather requires regular expenses such mortgage, real estate tax, and insurance payments, plus maintenance expenditures. By contrast, income-generating real estate generates continued rental income that exceeds expenses.

Second, securities issued by companies that own and operate commercial real estate (such as REIT) represent a diversified investment with exposure to a range of properties in different geographic locations. By comparison, a home’s investment risk is not diversified; rather, it is highly concentrated in a single location.

Real estate takes many shapes, including houses, hotels, resorts, apartment buildings, raw land, office buildings, industrial facilities, shopping centers, Transit Oriented Developments (TOD) and storage facilities. All of them are looking to make a healthy home, which is a home that is insulated, dry, clean, safe, ventilated, maintained, pest-free, and energy efficient. When you make your home healthy is important because it allows the occupants to remain safe and healthy in their living environment.

Different types of real estate require the employment of different strategies. For example, some involve current income and leasing, whereas others are more speculative and focus on capital appreciation, as well as the potential use of leverage such as construction and development.

Take a look at the highest performing TOD zip codes for rental units here.

Look at the zip codes with the most home value appreciate in TODs over the past year here. 

Sign up for our newsletter by typing your email address in the footer below and follow us on Facebook and Twitter for ongoing tips on how to expose your real estate portfolio to Transit Oriented Development through our advice at the TOD Index.

Leave a Reply

Your email address will not be published. Required fields are marked *