What’s The Best Way to Build a Real Estate Portfolio Right Now?

Commercial, residential, rental income, flipping, and buy-and-hold are just some options that potential real estate investors can use to build their real estate portfolios. Another question is whether real estate investors should diversify or specialize in their real estate holdings?

A recent Forbes article tackled this conundrum.

“Which is the best approach for you? Should you diversify or specialize your real estate portfolio? There isn’t a simple, one-size-fits-all answer,” a Forbes article noted. “As you build your real estate portfolio, you have to weigh the advantages and disadvantages to determine which plan is the best fit for your personal investment goals. I work with both types of real estate investors, and I’ve seen many success stories on each side.”

The article then outlined a series of questions investors should ask themselves.

  • “What is your biggest investment goal—appreciation or income?
  • Are you hoping to invest in a property that will appreciate over many years and result in a large profit when you sell?
  • Are you more interested in generating consistent ongoing income?

One question is whether an investors should purchase actual real estate or get exposure via exchange-traded funds? ETF investors who want to take advantage of the forthcoming changes in real estate can look at the FlexShares Global Quality Real Estate Index Fund (GQRE).

The fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.

GQRE Chart

GQRE data by YCharts

Another fund to check out is the Xtrackers International Real Estate ETF (HAUZ), which seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization-weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.

One more fund to look at is the Vanguard Real Estate ETF (NYSEArca: VNQ). VNQ seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of the MSCI US Investable Market Real Estate 25/50 Index that measures the performance of publicly traded equity REITs and other real estate-related investments.

For more market trends, visit the ETF Trends.