The document provides 3 reasons to invest in real estate: 1) Investing in real estate can diversify your portfolio since real estate has a low correlation with other asset classes. 2) The income return from real estate is attractive and stable, with around 80% of total returns coming from rental income over the long term. 3) Data shows that over a 10-year period, private market commercial real estate returned an average of 8.4% with relatively low volatility compared to equities and bonds.

1. 3 Reasons You
Should Be
Investing In Real
Estate

2. After the economic recession of 2008,
many people avoided investing in real
estate. This was because this era was
often linked with the housing bubble
and subprime mortgages. But the
truth is, real estate is a smart asset
class to invest in.

3. When you invest in real estate, you
are purchasing a future income
stream from property. It is in reality
quite unfair that real estate
investment is given a bad reputation.
Here are a few reasons to invest in
real estate:

4. You can diversify
your portfolio.

5. Investing in real estate can give you
incredible potential to diversify your
portfolio. The correlation between
real estate and other major asset
classes is low, and in some cases,
negative.

6. The income return
is attractive and
stable.

7. One big upside to real estate
investment is the sizeable proportion
of total return, accruing from rental
income over the long term. Between
1977 and 2007, about 80 percent of
total U.S. real estate return came
from income flows.

8. This leads to a decrease in volatility.
Investments that rely more heavily on
income return have a tendency to be
less volatile than those that rely more
heavily on capital value return.

9. In addition, real estate is more
attractive than more traditional
sources of income return. The asset
class usually trades at a yield that is
premium to U.S. Treasuries. It is
especially attractive in an
environment with low Treasury rates.

10. It has competitive
risk-adjusted
returns

11. Data from the National Council of Real
Estate Investment Fiduciaries
(NCREIF) shows that over the 10-year
period from 2000 to 2010, private
market commercial real estate
returned 8.4 percent on average. This
has a lot to do with low volatility
relative to equities and bonds.

12. Many critics feel the the reason real
estate has a low volatility is that real
estate transactions have not been
frequent. As a result, property values
are often determined using third-
party appraisals, which often cause
the market to lag.

13. As a result of infrequent transactions
and appraisals, there is a smoothing
of returns. In an upturn, reported
property values tend to
underestimate market values. In a
downturn, they tend to overestimate
market values.

14. Real estate volatility should be
adjusted upward, but real time
markets could undergo sudden shocks
at any moment. One example of this
occurred during the “Flash Crash” of
May 2010.

15. In just 15 minutes, $1 trillion in stock
market value was erased. When
market volatility is an issue and the
dynamics of algorithmic trading are
murky, real estate is an attractive
investment due to its more stable
pricing.

16. In just 15 minutes, $1 trillion in stock
market value was erased. When
market volatility is an issue and the
dynamics of algorithmic trading are
murky, real estate is an attractive
investment due to its more stable
pricing.