One way around this would be for me to load up on a few of the best real estate investment trusts. This would help to diversify my portfolio and may provide some protection against a correction or market crash. 

Reliable tenants

My first pick of the best real estate investment trusts to buy now is Primary Health Properties (LSE: PHP). This company owns purpose-built facilities which it leases out to GPs and government bodies. 

Unsurprisingly, rental income is about as predictable as it gets. Occupancy rates are also very high, at 99.6%. I can’t see this falling in the aftermath of the pandemic either. In fact, Covid-19 has served as a reminder of the importance of providing access to appropriate healthcare outside of hospitals.

Sure, PHP will never shoot the lights out. The share price has climbed a little under 50% since 2016. That’s clearly far less than I could have made elsewhere, highlighting arguably its biggest drawback.

Then again, massive gains aren’t the objective here. This is primarily a vehicle for protecting cash. It’s also a great income play. Right now, analysts have PHP yielding 3.7%. 

Hot property

Another option if I were looking for downside protection, at least in my view, is Tritax Eurobox (LSE: EBOX). If the name rings a bell, that’s because the much larger, UK-focused Tritax Big Box is currently knocking on the door of the FTSE 100. 

EBOX specialises in what might be regarded as ‘hot property’ at this point in time, namely warehouses. Thanks to the huge growth seen in e-commerce (and supported by the pandemic), retailers are crying out for more logistics space to hold their stock. This has helped send the share price more than 30% higher over the last year. 

Yes, an economic slowdown may put an end to this momentum as people tighten the purse strings. Even if this doesn’t happen, we could see more money being spent on experiences as opposed to possessions for a while.

However, I doubt this will hold back EBOX for long. And at around a £750m market cap, the company has a lot of space left to grow. The shares also yield 3.5%, as I type. 

Inflation-linked income

I think we can all agree that supermarkets are pretty defensive businesses. Since we all need to eat, it makes sense that cautious investors might want some exposure to this space.

If I didn’t want the hassle of picking a winner out from the pack, I could buy Supermarket Income REIT (LSE: SUPR). It aims to provide owners with inflation-linked income as well as capital appreciation over time. It does this by investing in omnichannel stores — large supermarkets that also operate as fulfilment centres for customers wanting home delivery and the option to click and collect. Its chief customers are the UK’s ‘big four’: market-leader Tesco, Sainsbury, Asda and Morrisons.

Will this approach deliver greater gains than investing in one of the companies mentioned above? Probably not. However, SUPR does boast a super forecast yield of 4.9%.

Like PHP and EBOX, I think this makes it one of the best real estate investment trusts to buy now. 

The post 3 of the best real estate investment trusts to buy now appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Morrisons, Primary Health Properties, Tesco, and Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Of course, many people will simply consider this element of their wealth to be covered by the house they live in, which they will own outright once the mortgage is wiped. Others will want to take things further.

Today, I’m looking at a relatively fuss-free way of making extra cash from property.  Before doing so, however, it’s worth mentioning why this solution isn’t buy-to-let.

Whole lotta hassle

There are, of course, attractions to becoming a landlord. Rent received will cover (or go some way towards covering) the mortgage payments on the property that’s being let.

The fact that house prices gradually rise over time, albeit through a few inevitable market wobbles, also means the owner could/should benefit handsomely when they come to sell. Aside from this, tangible assets like an extra house or flat give some people peace of mind compared to numbers on a screen.

That said, the idea that becoming a landlord as an easy route to riches is most definitely flawed. As well as ongoing maintenance, tax considerations and legal hoops-a-plenty, those wanting to let a property need to be prepared for periods in which they may struggle to find a tenant. Owners must also have to contend with troublesome renters who don’t treat the flat or house with quite as much care as they would like.

Should the life of a landlord not be what you expected, it’s worth remembering that selling any property can also take a lot longer than you think. 

So, what’s the alternative? 

Here at the Fool UK, we think there’s a far less stressful way of getting exposure to this asset class beyond your own home. Real Estate Investment Trusts (REITs) are quoted companies that own and manage all sorts of commercial and residential property. Through buying into these companies, investors get a massive slice (usually a minimum of 90%) of the trust’s rental income.

Unlike the underlying properties, REITs are also liquid in that you can buy and sell them just like ordinary shares. A further benefit is that they allow investors to focus on niche areas of the market. 

If you think the demand for warehouses from companies like Amazon will continue growing, for example, then Tritax Big Box — which rents out such spaces — may be worth investigating further. It’s set to generate a yield of 4.8% for investors this year, based on the current share price.

If you suspect our tendency to hoard stuff isn’t going to disappear anytime soon, self-storage players Big Yellow or Safestore — yielding 2.8% and 2.2% respectively — could also be ideal additions to your portfolio. 

For those who prefer the passive approach, US giant iShares offers the UK Property UCITS ETF. For an ongoing charge of 0.4%, you can track the performance of an index composed purely of REITS and UK-listed real estate companies, the yield from which is currently 3.3%. 

Although nothing can be guaranteed — REITs have a tendency to be volatile during housing/general market downturns — these options should, in my opinion, be far more appealing to busy private investors.

The post Forget buy-to-let. I’d make money from property this way! appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

One such firm is Tritax EuroBox (LSE: EBOX), a REIT focusing solely on European big box warehouses. If the name sound familiar that’s because Tritax is the manager behind the UK-focused Tritax BigBox, which has done very well and over the past five years delivered a total return of over 80% thanks to a hefty dividend and capital appreciation.

The plan for EuroBox is much the same as for Tritax’s first publicly-traded REIT, namely to use the £301m it raised with its IPO to buy up large warehouses situated near major motorways and sign long-term leases with blue-chip customers. This same strategy has worked phenomenally well in the UK thanks to fast-rising demand for such warehouses from pureplay e-commerce retailers and traditional retailers that need to quickly and efficiently deliver goods to customer’s homes as well as to stores.

With little to suggest that this trend will slow down any time soon, EuroBox is well-positioned then to profit from its ability to purchase existing locations or to build its own warehouses on a completely pre-let basis, which removes a huge amount of risk for the fund and investors. As the fund just went public and is in the process of making its first purchases, returns are completely hypothetical right now, but Tritax is targeting a 4.75% dividend yield and medium-term target return of 9%.

Both of these targets look eminently achievable in my eyes and given Tritax’s great track record with BigBox, I think income investors would be well-served by checking out EuroBox for themselves.

A novel market newcomer

While EuroBox investors can at least use the track record of BigBox and US-listed warehouse REITS as a guide to what to expect, investors in the brand new Hipgnosis Songs Fund (LSE: SONG) are very much on their own.

Hipgnosis has been set up by music industry veteran Merck Mercuriadis, who has served as manager to Elton John and Guns N’ Roses among other big names, to purchase writers’, publishers’ and performance rights to songwriters’ creations. The company’s IPO raised £202.2m towards the end of June and the fund has already made its first investment, a 75% interest in the catalogue of songwriter The-Dream for $23.75m. This purchase includes the rights to 302 songs performed by artists such Justin Bieber, Jay-Z and Rihanna.

Once it owns the songwriter’s rights to songs, the fund can license them as well as earn royalties each time they are played. This income stream is intended to be directed towards further acquisitions and steady dividends paid to shareholders. Management’s target is for an initial dividend yield of around 5% with annual NAV returns of 10%.

The fund is certainly a novel idea and with big names in the music industry lined up behind it, it certainly won’t lack for insider knowledge and expertise. However, with a relatively untested businesses model I’ll be watching from the sidelines for the time being to see how it all shakes out for Hipgnosis. 

The post Two brand new investment trusts for income-hungry investors appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK has recommended Tritax Big Box REIT. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.