1. Property investment
1.1. characteristics
1.1.1. physical
1.1.1.1. immobile
1.1.1.2. durable
1.1.1.3. unique/no close substitutes
1.1.2. economic
1.1.2.1. scarce supply
1.1.2.1.1. land is scarce
1.1.2.2. can be improved physically
1.1.2.3. permanence of investment
1.1.2.3.1. improvements like drainage electricity are harder to remove
1.1.2.4. area preference
1.1.2.4.1. location is an important factor to land value.
1.2. Types of investments
1.2.1. Residential
1.2.1.1. single-family homes
1.2.1.1.1. single family
1.2.1.1.2. no shared walls
1.2.1.2. Co-ops
1.2.1.2.1. land/building is owned by a corporation
1.2.1.2.2. purchasing a unit is like purchasing a share in the corporation
1.2.1.3. Condomonium
1.2.1.3.1. individual apartment with shared areas and amenities
1.2.1.4. townhouse
1.2.1.4.1. it is a single-family residential with shared walls, like typical dutch houses
1.2.1.5. vacation houses
1.2.1.6. multi-family home
1.2.2. Commercial
1.2.2.1. multi family
1.2.2.2. retail
1.2.2.3. office
1.2.2.4. storage
1.2.2.4.1. self
1.2.2.4.2. distribution and storage
1.2.2.5. hotel
1.2.2.6. mobile homes
1.2.2.7. land
1.2.2.8. industrial
1.2.2.9. manufacturing
1.2.2.10. flex space
1.2.2.10.1. land has divided commercial use
1.3. Classifications
1.3.1. Class A
1.3.1.1. High quality properties
1.3.1.2. top amenities
1.3.1.3. competitive
1.3.1.3.1. tighter profit margin
1.3.1.4. recently built (15 years ago)
1.3.1.5. built in desirable areas
1.3.1.6. low risk
1.3.2. Class B
1.3.2.1. Older
1.3.2.2. Some investment is needed
1.3.2.3. nice amenities
1.3.2.4. higher risk
1.3.2.5. can be improved to B+ or A, leading to higher margins
1.3.3. Class C
1.3.3.1. 30 year or older buildings
1.3.3.2. renovations required
1.3.3.3. higher risk, higher returns
1.4. Income source
1.4.1. Homeownership
1.4.2. Home-flipping
1.4.3. Renting and leasing
1.5. Pro & Con
1.5.1. Pro
1.5.1.1. Steady income
1.5.1.2. offers capital appreciating
1.5.1.3. diverse portfolio
1.5.1.4. can be bought with leverage
1.6. Cons
1.6.1. Illiquid
1.6.2. can be influenced by local factors
1.6.3. requires large capital investments
1.6.4. active management
2. Works cited
2.1. https://www.yieldstreet.com/resources/article/understanding-real-estate-asset-classes-and-property-types
2.2. A Complete Guide to REIT ETFs
2.3. https://www.yieldstreet.com/resources/article/introduction-to-classes-in-real-estate-investing
2.4. https://www.fool.com/millionacres/real-estate-investing/reits/your-complete-reit-etf-guide/
3. Trust/funds
3.1. Real Estate Investment Trust (REIT)
3.1.1. Functions
3.1.1.1. Dividend funds: investors buy shares in company and earn dividends
3.1.1.2. Real Estate companies which trade in public exchange market
3.1.1.3. Property investments/management
3.1.1.4. REIT types
3.1.1.4.1. Sector focused
3.1.1.4.2. Diverse
3.1.2. Income source/value generation
3.1.2.1. Lease and rent existing properties
3.1.2.2. Selling properties
3.1.2.3. Property investments/management
3.1.3. Requirements
3.1.3.1. A minimum of 100 shareholders
3.1.3.2. No five shareholders can hold more than 50% of the total number of shares.
3.1.3.3. Seventy-five percent (75%) of the gross income should come from real estate investments.
3.1.3.4. The company should distribute at least 90% of the annual net income.
3.1.3.5. Invest at least 75% of incomes in real estate, US Treasuries, or cash.
3.1.3.6. These requirements allow REITs to be exempted from corporate taxes and redistribute 90% of their taxable income to shareholders via dividends.
3.1.4. Equity REITS
3.1.4.1. Own properties
3.1.5. Mortgage REITS
3.1.5.1. Give out mortgages to property owners
3.1.6. Hybrid REIT
3.1.6.1. Do both
3.2. Real Estate Operating Company (REOC)
3.2.1. Functions
3.2.1.1. Also trade on public exchange markets
3.2.1.2. Accumulating: reinvest income into properties
3.2.1.3. REOC tyoes
3.2.1.3.1. Sector focused
3.2.1.3.2. Diverse
3.2.2. Income source/value generation
3.2.2.1. Property investments/management
3.2.2.2. Improving property using internal funds
3.2.2.3. Reselling property
3.2.3. No Requirements, but subject to corporate taxes
3.3. Fund types
3.3.1. Public & traded
3.3.1.1. Liquid (shares)
3.3.1.2. Minimum investment: Depends on the share price.
3.3.1.3. Any individual investor can invest
3.3.1.4. Audited financial statements with SEC filing
3.3.2. Public non-traded REITS
3.3.2.1. Shares only acquirable through brokers with high fees
3.3.2.2. Minimum hold periods
3.3.2.3. Selling constraints
3.3.2.4. Lower correlation with stock market
3.3.3. Private
3.3.3.1. Little info available, no SEC regulation
3.3.3.2. illiquid
3.3.3.3. Large minimum investment up to 10,000 dollars
3.3.3.4. For qualified and accredited investors
3.3.3.5. Lower correlation with market
3.4. Pro & Con
3.4.1. Pro
3.4.1.1. Liquidity
3.4.1.2. Diversification
3.4.1.3. Steady dividend flow
3.4.1.4. Risk adjusted returns
3.4.2. Cons
3.4.2.1. low growth
3.4.2.2. Taxes
3.4.2.3. Subject to market risk
3.4.2.4. Potential high fees
4. ETF
4.1. passively managed fund that track an index
4.2. Pro & Con
4.2.1. Pro
4.2.1.1. Big diversification
4.2.1.2. time saving, no need to do research
4.2.1.3. tax saving
4.2.2. Con
4.2.2.1. Lower returns than REITs
4.2.2.2. fees
5. Mortgage backed securities
5.1. Characteristics
5.1.1. Bond like coupon payments
5.1.2. consists of home loans
5.1.3. Can be bough via ETF or brokers
5.2. Types
5.2.1. Pass through
5.2.1.1. Pass-throughs are structured as trusts in which mortgage payments are collected and passed through to investors. They typically have stated maturities of five, 15, or 30 years. The life of a pass-through may be less than the stated maturity depending on the principal payments on the mortgages that make up the pass-through.
5.2.2. Collateralized Mortgage Obligations
5.2.2.1. CMOs consist of multiple pools of securities which are known as slices, or tranches. The tranches are given credit ratings which determine the rates that are returned to investors.
5.3. pro & cons
5.3.1. Pro
5.3.1.1. liquid
5.3.1.2. higher returns than bonds and low volatility (high risk adjusted returns
5.3.2. low correlation to other asset classes (diversification)
5.3.3. Cons
5.3.3.1. unpredictable maturity due to prepayments from refinancing, house sale, and foreclosures
5.3.3.2. unpredictable interest income from large prepayments
5.3.3.3. negative convexity - security prices increase at decreasing rate when bond rates fall, but decrease at increasing rate when rates are rising
6. Index
6.1. World
6.1.1. MSCI World Real Estate Index
6.1.1.1. The MSCI World Real Estate Index is a free float-adjusted market capitalization index that consists of large and mid-cap equity across 23 Developed Markets (DM) countries*. All securities in the index are classified in the Real Estate Sector according to the Global Industry Classification Standard (GICS®).
6.1.2. S&P Global Property Index
6.1.3. S&P Global REIT Index
6.2. The Index is designed to measure the stock performance of companies engaged in specific real estate activities of the North American, European and Asian real estate markets. Relevant real estate activities are defined as the ownership, trading and development of income-producing real estate.
6.3. Developed Market
6.3.1. FTSE EPRA/NAREIT Developed Index
6.3.2. S&P Global Developed Property Index
6.4. Emerging Market
6.4.1. AlphaShares Emerging Markets Real Estate Index
6.4.1.1. The index is designed to measure and monitor the performance of the investable universe of publicly-traded companies and real estate investment trusts (REITs) deriving a majority of their revenues from real estate development, management and/or ownership of property in the countries of the S&P BMI Emerging Markets Index.
6.4.2. MSCI Emerging Markets Real Estate Index
6.5. Continental
6.5.1. Europe
6.5.1.1. S&P Europe Property Index
6.5.1.1.1. The index is an unmanaged float adjusted index which defines and measures the investable universe of publicly traded property companies domiciled in developed European countries, that derive more than half of their revenue from property-related activities, such as property ownership, management, development, rental and investment.
6.5.2. Asia Pacific
6.5.2.1. S&P Asia Pacific Property Index
6.5.2.1.1. The index is an unmanaged float adjusted index which defines and measures the investable universe of publicly traded property companies domiciled in developed countries in the Asia Pacific region, that derive more than half of their revenue from property-related activities, such as property ownership, management, development, rental and investment.
6.5.2.2. MSCI AC Asia Pacific Real Estate Index
6.5.3. Africa & Middle east
6.5.3.1. FTSE EPRA Nareit Middle East & Africa Index
6.5.4. Latin America
6.5.4.1. Solactive Latin America Real Estate Index
6.5.4.1.1. The Index tracks real estate companies in the Latin-America region. Weights in these companies depend on market cap, dividend yield, and share liquidity. The higher the dividend yield and share liquidity, the higher the weight of the respective company in the index.
6.5.4.2. MSCI EM Latin America Real Estate Index
6.5.5. North America
6.5.5.1. FTSE EPRA Nareit North American Index
6.6. Country (top 10 countries with the largest real estate value according to MSCI https://www.msci.com/documents/10199/035f2439-e28e-09c8-2a78-4c096e92e622)
6.6.1. US
6.6.1.1. US Dow Jones Real Estate Index
6.6.1.2. FTSE Nareit U.S. Real Estate Index
6.6.2. China
6.6.2.1. MSCI China Real Estate Index
6.6.2.1.1. The MSCI China Real Estate Index is designed to capture the large and mid-cap segments of the China equity markets. Currently, the index also includes Large Cap A shares represented at 10% of their free float adjusted market capitalization. All securities in the index are classified in the Real Estate Sector according to the Global Industry Classification Standard (GICS®).
6.6.3. Canada
6.6.3.1. MSCI Canada Real Estate Index
6.6.4. UK
6.6.4.1. MSCI UK IMI Core Real Estate Index
6.6.5. Japan
6.6.5.1. MSCI Japan IMI REITS Index
6.6.6. Germany
6.6.6.1. FTSE EPRA/NAREIT Germany Index
6.6.7. Hong Kong
6.6.7.1. FTSE EPRA/NAREIT Hong Kong Index
6.6.8. France
6.6.8.1. FTSE EPRA/NAREIT France Index
6.6.9. Australia
6.6.9.1. FTSE EPRA/NAREIT Australia Index
6.6.10. Switzerland
6.6.10.1. FTSE EPRA/NAREIT Switzerland Index
6.7. Countries with largest home price growth
6.7.1. Australia
6.7.2. Austria
7. mortgage
7.1. Pro & Cons
7.1.1. Pro
7.1.1.1. additional income
7.1.1.2. property is the collateral
7.1.2. con
7.1.2.1. default