Is it possible to profit from property without owning a house or apartment?
It’s a good question because property is a huge asset class and worth considering, but an investment is only worth going for if it will make you money.
Property prices have been going down for a while now. Most buyers during the past year will have a paper loss. Any investors will be facing a paper loss and the negative cashflow thanks to negative gearing.
But, that doesn’t mean that it’s impossible to profit from the property sector. It doesn’t even mean taking on debt! All you need is some money to invest in businesses on the ASX.
Here are three different groups of ideas:
One of the most common ways to get exposure to the property sector is through ASX banks. Indeed, the ASX banking sector is largely a bet on Australia’s housing market.
Obvious examples are larger banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) as well as smaller banks like Bank of Queensland Limited (ASX: BOQ) and Bendigo and Adelaide Bank Ltd (ASX: BEN).
Real estate investment trusts (REITs)
Commercial property is also a way to get invested in property. Again, you don’t have to buy a property outright yourself, you just have to own a tiny piece of an ASX REIT such as National Storage REIT (ASX: NSR), Goodman Group (ASX: GMG) and Rural Funds Group (ASX: RFF).
Property builders and owners
Retirement village builders and operators are exposed to similar positives and negatives, as well as the ageing tailwind. Some of the examples in this space are Ingenia Communities Group (ASX: INA) and Aveo Group (ASX: AOG).
Finally, there are many property-related businesses that service the property or its owner in some way. For example, there are property advertisers like REA Group Limited (ASX: REA) and property product businesses such as Reece Ltd (ASX: REH) and DuluxGroup Limited (ASX: DLX).
The current housing market trend shows that houses may not be as safe for your money as they’re cracked up to be.
There are other ways to get exposure that are much more likely to be profitable over the next few years than an investment property. Currently, I think Rural Funds Group, REA Group and Reece could be the best options to go with.
Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended National Storage REIT and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.