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Residential REITs may be worthwhile investments

Michigan investors may continue to find real estate investment trusts attractive when it comes to long-term income. This is spite of the fact that mid-2013 interest rates had been taking a bigger bite of commercial real estate prices than in earlier months.

For an illustrative example of this trend, one need look no further than the price for what is considered an industry benchmark, Cohen & Steers Realty Majors. From May to October 2013, it's down 11 percent. Residential real estate investment trusts, or REITs, however, have done better than the REIT group as a whole. Equity Residential lost a smaller 5.5 percent, and Avalon Bay dropped just 3.9 percent. In contrast, Post Properties fell a painful 8.9 percent.

Bucking this trend over those months was one extremely attractive REIT known as UMH Properties. The landlord for mobile home parks was down 5.7 percent in the five-month period starting on May 1, but with the pullback on its price, analysts said it looked like a good investment because of a dividend yield higher than 7 percent and a rising trend in funds from its operations. UMH Properties is based in Freehold, New Jersey, and was originally named United Mobile Homes when it started in 1968. It is a family-run REIT that owns 69 mobile home parks with about 12,800 lots in seven states. UMH Properties collects rent from the owners of manufactured homes who live on UMH-owned property. The company also sells homes.

For commercial real estate professionals, issues such as boundary disputes and construction disputes can derail even the most promising project. A Michigan real estate lawyer may offer valuable assistance to clients facing title disputes or complex paperwork for purchases and sales in order to make working with contracts less stressful for busy owners.

Source: Forbes, "Nothing Trashy About Trailer Park Landlord's Fat Yield", John Dobosz, October 08, 2013

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