Asset Class: Real Estate Investments

DON'T LIKE IT    

Real estate investing has some positive qualities such as high current income potential and ownership of real property.  However, it has similar drawbacks as some other investments such as corporate bonds that don’t perform as well as equity on the upside and they don’t perform as well as U.S. Treasury bonds on the downside.  Upside potential of real estate can certainly be enhanced with leverage, but that serves to increase the downside risk as well.  Another weakness of real estate in our investing framework is that real estate cycles tend to lag the economic cycle.  We prefer assets that are more sensitive to the current state of the overall economy.

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The preceding is an excerpt from the Modus Advisors Special Report titled, "Like It or Not? The Modus Advisors approach to Asset Class Investing".

You can download the complete report here.

We also have a podcast discussion of the report available here.