Thinking of investing in an REIT and India ETF. Should I?

[Jez]

Hi everyone.

 

So, I've been thinking lately, that given the booming rise in Aus property, for a young person such as myself, it's becoming more and more difficult to buy into the Aus property market, and I don't want to buy in at a high either.

 

I personally think Aus property is overvalued.  Whether it will drop in value or not is another question (I don't think it will, since there is still strong demand (nationally and internationally), an overall lack of supply, and government policies such as negative gearing that support / reward over-leveraging.  But who knows?).  

 

Now I know property rises and falls are all very localised.  And I don't live in Sydney or Melbourne where the insane gains have been happening.  But the city I live in is still expensive in my opinion.

 

One day I will obviously buy a house (to live in), but I think it's best I have a large downpayment first, so for the time-been I've been thinking recently I can test property ownership on a smaller scale instead.  And buy into a US property REIT.  The reason why I'm picking US property, is because I still believe it has room to grow.  Another benefit of an REIT over single property ownership is the diversification aspect.  So my stake will be spread over a large basket of properties instead of just one (plus it's liquid, so I can bail out quickly should it go pear-shaped).

 

Anyways what does everyone think about this idea?  Would you personally invest in a property REIT / ETF?  

 

An example REIT I found on Bloomberg is the Vanguard REIT ETF (VNQ), which has the following performance:

 

1-Month: 1.2%

3-Month: 2.89%

1-year: 25%

3-year: 14.16%

5-year: 15.45%

 

Dividend Yield: 3.5%

Assets: $28.436.0703 (M)

Fund Leveraged:  N

 

What do you guys think of the above VNQ fund?

 

 

Another idea I have, is to invest in an India ETF.  I believe India is obviously a high growth area.  My simplistic reasoning is that it's an emerging economy.  High population, which will be experiencing a continually growing (and young) population over the coming years (versus almost every other major economy which will have slowing and ageing populations).  And, as China looks to start off-shoring it's own manufacturing over the years and slowly transition to a more consumer based economy, India is in the perfect position to pick up some of this slack and provide services and exports to China (and the world).  Also I remember seeing an India ETF last year (forgot which one) that had fairly high gains (I think it had the highest gains out of any country based ETF).  Downside of India however is probably corruption.  Some India ETF's won't pick the right assets and therefore won't grow, global economy might halter, and so forth.  

 

 

If I invest in these ETFs they will most likely have to be in US dollars too.  This probably has another added advantage however, since I honestly think the Aus dollar can only continue going down.  

 

What does everyone think?  Need help.

[ChrisSilver]

I personally think that long term the US housing market won't do great, and that's solely because of the amount of debt they have. I think the US is due for a depression and some point in the not so distance future things will fall apart there. I may be completely wrong, but that's my opinion.

India would excite me more and the rest of the BRICS nations (excluding china as they have a huge property bubble)

Would you could look at is something like this: http://www.thehousecrowd.com this is UK based (and properly deserves it's own thread) but I am sure there must be an Australian alternative or one for most markets. It's crowd funding, they group together money and purchase a property, renovate it and then rent it out (I think to students - as they are high paying rent) for the next 5 years then sell it. Read on their website for more detail about how the profit share etc works. Could also be an option.

[HighlandTiger]

Would you could look at is something like this: http://www.thehousecrowd.com this is UK based (and properly deserves it's own thread)

 

@ChrisSilver

 

Have you dealt with these guys before. I've been looking into this for the past month or so, and I'm very tempted to buy a £1000 share or two per year. Just a little bit of diversification so to speak, away from Pm's. Just wondered if you or anyone else here has dipped their toes into this. If people don't want to divulge on an open forum, feel free to message me. 

[ChrisSilver]

@ChrisSilver

 

Have you dealt with these guys before. I've been looking into this for the past month or so, and I'm very tempted to buy a £1000 share or two per year. Just a little bit of diversification so to speak, away from Pm's. Just wondered if you or anyone else here has dipped their toes into this. If people don't want to divulge on an open forum, feel free to message me. 

 

I haven't invested in them. It does look good in my opinion for those who want to invest a small amount into property. Not sure if the % returns have changed since I looked at it. I would also advise checking out how easy it would be to sell your share if you needed to. When I asked if you wanted to exit before their planned 5 year sale date, then I believe that they would purchase back your share at the original price you paid, but if you would obviously loose any appreciation in value.

[Cointreau]

https://www.techinasia.com/singaporebased-real-estate-crowdfunding-site-nabs-733k-investment/

 

 

https://www.coassets.com/