Co-authored with Tread Softley
My first job was at McDonald’s. There I learned the very rudimentary basics of customer service. I did almost every job during his three years there, from taking orders. From cooking at the register, to cooking behind the scenes, and even performing various maintenance tasks around the facility. I distinctly remember an older maintenance worker coming in and working on the ice cream and milkshake machines that kept breaking. That’s right, even back then, the machine did not work as expected.
He only worked one or two days a week. He seemed to set a time, show up when I wanted to fix it, and leave. Every time we ask the store owner why he puts up with this grumpy old man; He replied that he did whatever he wanted, but that he was one of the only people who could repair the machine and that he was only working for his own pleasure. As you know, this old man owned a large property in the city, rented out several houses, and had a strong source of income. He came to repair machines just to keep himself busy, because he liked working with machines, not because he needed the income from the job, and apparently most weeks, some months, he didn’t get paid. Apparently he didn’t even turn it into cash.
When it comes to the market, you no longer need to own a large number of different homes and properties or have the capital to become a real estate developer. In the 70s, 80s, and even 90s, many people took on debt or tried to maximize themselves to become real estate moguls.
Today we want to take a look at how you can build a global real estate empire from the comfort of your home without needing billions of dollars.
Let’s dive in!
global portfolio
When interest rates rise, the market sells REITs. We are currently seeing REIT prices rising as the market believes interest rates are at or near peak.
abrdn global premier property fund (AWP) is a 12.4% yielding CEF focused on global REITs. His REITs in the US make up the majority of the portfolio, but his REITs outside the US make up his 37% of the portfolio. sauce
This provides international exposure to what is often a US-centric portfolio. This international exposure is negative for the US, given the strength of the US dollar and the generally strong US economy. AWPperformance compared to other US-focused funds
Turning to ETFs, the U.S.-focused Vanguard Real Estate ETF (VNQ) outperformed the Vanguard Global Ex-U.S. Real Estate ETF (VNQI).
This is not surprising since AWP’s results are right in the middle, with moderate leverage and about two-thirds US and one-third non-US.
Many investors will focus on AWP and compare it to just VNQ. “We’re underperforming! Sell, sell, sell!” they shout. You are completely ignoring the fact that you are comparing apples to oranges.
One of the main reasons to buy a fund is to gain diversified exposure to asset classes that you might not otherwise be able to include in your portfolio. That’s an important part of diversifying. AWP has seen a lot of negative pressure on its European holdings, including Vonovia SE (OTCPK:VONOY), as real estate markets across Europe are experiencing hardships similar to those that occurred in the United States during the Great Financial Crisis. There is. Prices have plummeted, dividends have been cut, and investment returns have stagnated. Do you know what the Global Financial Crisis (GFC) was in America? It’s a great time to buy US REITs.
AWP’s strategy of combining U.S. and non-U.S. REITs allows a relatively strong portion of its portfolio to fund dividends. When considering whether dividends are sustainable for CEFs, you need to understand that CEFs pay out a combination of both income they receive and capital gains. Not all investment portfolios provide uniform returns. Some years the profits are large and some years there are no profits at all. CEF’s managers set the dividend at a level they believe will be sustainable over the long term.
Like any portfolio, investments have both ups and downs at a given point in time. Looking at NAV tells you the change in the net unrealized value of all the holdings in your portfolio. This is page 22 of AWP’s semi-annual report.
Note that AWP had unrealized gains of just under $44.5 million, but unrealized losses of $48.5 million. Some holdings are rising, while others are falling. Just as when selling a portfolio, management has the option of realizing a loss or selling something that realizes a gain.
In Europe, real estate prices are showing signs of bottoming out, and REITs in the U.S. are booming amid expectations that the U.S. Federal Reserve will reverse its interest rate hikes. This creates a situation where both sides of AWP’s portfolio are seeing positive momentum, something not seen since the recovery from COVID-19 and the last time AWP was below $4.
conclusion
I learned that the best time to buy something is when no one else thinks it’s a good time to buy it. The same goes for “buy low and sell high.” Unfortunately, too many investors fail to outperform the market simply by “buying high and selling low.” They buy what they think others are already buying and sell when they see others selling it. Typically, these investors end up being a day late and thousands of dollars late. This is why when I developed my own income method, I designed it to have a different goal than the lemmings on the market. I’m not blindly chasing capital gains. I control the part of the equation that I can control: the income I receive.
After I retire, the last thing I want to do is work to pay my living expenses. I want you to have an empire of income-producing investments that will help you fund your retirement. Then, like the old man, you can work if you want to, not because you need the cash, but to get rich. For many people, it would be nice to have the opportunity to say that they don’t need to stamp because they need the money, but because they chose to do so, it could revolutionize the way they approach work at work. Sho. . Similarly, increasing your income and reducing stress will make a huge difference to your retirement. This is completely possible with my income method.
That’s the beauty of my income method. That’s the beauty of income investing.