A couple of new research reports are spotlighting the fact that as house values continue to drop and foreclosures glut many markets, the rental market is soaring. Foreclosures increase the number of renters, and research provided by Reis points out that the current vacancy rate of 4.9% is the lowest since 2001.
As Zillow notes, the areas that have had the worst value declines also saw the greatest rent increases, and foreclosures will likely continue to put a damper on home prices for some time.
All these indicators paint a rosy picture for real estate investment trusts that feature apartment buildings, and investors are taking notice. Here are three that have been performing particularly well over the past year.
Essex Property Trust
Foolish bottom line
Any or all of these large REITs would do an investor proud, especially with the sunny forecast for the rental market. With REITs, there is the added benefit that requires these entities to pay out 90% of their yearly income in dividends to shareholders; since most of this income is derived from rents, trusts that own and manage luxury apartments seem to me to be the cream of the crop.
If you've ever thought about investing in real estate but are squeamish about doing so by becoming a landlord, rental REITs may be just what you've been looking for.
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Fool contributor Amanda Alix owns no shares in the companies mentioned above. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.