REIT investment touted amid housing shortage

“As crazy as the housing market is for many folks across the country, we’re trying to provide the next best investment vehicle for folks to achieve some form of the American Dream,” Auerbach told Mortgage Professional America in a telephone interview. “As mortgage rates go up and as housing prices get more and more out of reach for the average home investor, we’re trying to position his portfolio around the property types that have benefited from either the various demographics and relocation or the property types that have benefited from the folks that have been shut out of the housing market such as the apartments, single family rentals and the manufactured housing side of things. We’re also focusing on student housing and senior housing. So, we’re looking at pretty much all age lifecycles of regular consumers’ housing needs.”

Some of those segments are red hot, even as the housing market has screeched to a halt. Auerbach said sectors such as single-family rentals, manufactured housing, senior housing and apartments are likely to see “massive growth” given the supply-demand imbalance. What’s more, all sectors of residential REITs are seeing increased demand, higher rents and an improved outlook, Auerbach noted.

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Related stocks are similarly sizzling, Auerbach said, including Tricon, Invitation Homes, and AMH – the only publicly traded players in the space. “Invitation Homes is the 800-pound gorilla in single family rental, with no ending in sight with the four-million-unit housing shortage,” Auerbach said. The stock was up 55% in 2021 and 57% from 2019 through the end of 2021.

Earlier this month, Armada partnered with Tidal ETF Services LLC in launching the Home Appreciation US REIT ETF as the first active pure-play US residential real estate exchange-traded fund. The fund invests in publicly traded REITs that derive their revenue from ownership and/or management of residential properties. “Our fund owns 25 to 30 publicly traded stocks that are residential REITs that own those various property types,” Auerbach explained, noting that investors gain “fractional ownership” of such properties by virtue of their investment.