Thinking Outside the Box: 7 New Ways to Invest

Traditionally, real estate investment has been in each of the five main property types: retail, industrial, multifamily, office, and hospitality. Yet in the last decade or so, investors have been branching out into more specialized endeavors.

Farms

The world’s population is expected to increase to about 9 billion people by 2050, while the UN predicts a steady decline in the amount of arable land per capita from 0.218 to 0.181 hectares in that same time. In the Midwest, there has been a 128% rise in average farmland values over the last decade, shooting up from $1,270 an acre in 2003 to $2,900 in 2013 (by USDA estimates).

Self-Storage

Two big reasons why self-storage units are attractive to investors? They don’t have to pay for tenant improvements or any lease commissions.

Data Centers

With more and more of our data being stored in the cloud, the actual servers that make up the cloud require more square feet on the ground in large warehouses.

Single-Family Homes

According to Joseph Greenblatt, president of the Institute of Real Estate Management in San Diego, Millennials are “quickly becoming our most significant rental market…These are the people who witnessed their parents’ foreclosures and so are leery about homeownership.” Increasing amounts of student loan debt combined with a weak job market haven’t helped much, either.

Medical Office Buildings

With occupancy rates expected to increase due to aging baby boomers and the Patient Protection and Affordable Care Act, there doesn’t seem to be an end in sight to the demand for medical office buildings (MOBs). According to Real Capital Analytics, sales of MOBs topped $6.7 billion in 2013.

Senior Housing

Starting on January 1, 2011, and projected to for the next 19 years, an estimated 10,000 Americans will turn age 65 every single day. Baby Boomers comprise 26% of the total US population and tens of millions of them are expected to retire within the next decade.

Billboards

Similar to self-storage, billboard owners don’t have to worry about tenants. But their biggest draw came after the IRS ruled in 2012 that billboards are considered to be real property. That ruling prompted companies like Lamar Advertising to pursue real estate investment trust (REIT) status, which would require them to pay out no less than 90% of their income to investors as taxable dividends and then be able to exempt that income from corporate taxes.