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I am looking to create an "Insurance policy" on my real estate portfolio, I own free and clear apartments and houses (All residential units and short-term rental units).
I have been looking for a way to buy every month assets/ETF/Stocks that will drop/go up sharply in case the real estate market goes south. not looking to make a 1:1 ratio on the drop value, in case of a drop I will not sell the real estate. I am just looking for ideas to "Insure" the value (and willing to pay a price every month).
Any ideas?
I am looking to create an "Insurance policy" on my real estate portfolio, I own free and clear apartments and houses (All residential units and short-term rental units).
I have been looking for a way to buy every month assets/ETF/Stocks that will drop/go up sharply in case the real estate market goes south. not looking to make a 1:1 ratio on the drop value, in case of a drop I will not sell the real estate. I am just looking for ideas to "Insure" the value (and willing to pay a price every month).
Any ideas?
You can’t because real estate is localized as well as not consistent in its actions …
There is no seesaw effect between assets …some assets react to economic outcomes better than others but one time like 2008 falling rates saw real estate plunge and the next time real estate went up . 1987 saw rates rising and real estate rising
Real estate is usually omitted from all weather portfolios..it is just to inconsistent and localized to be counted on to react a certain way under a certain condition.
So it. Is very difficult to hedge it normally …you may be able to find an inverse real estate fund but again , prices may be rising in your area and falling in others
Last edited by mathjak107; 07-13-2021 at 06:55 AM..
If prices go up in my area and I lose my investment in the "Insurance", I am ok with that, I want to protect myself from a 2008 scenario where everything is going down.
I understand that the ETFs are daily ETFs which makes them not attractive for a long-term investment.
I am looking to create an "Insurance policy" on my real estate portfolio, I own free and clear apartments and houses (All residential units and short-term rental units).
I have been looking for a way to buy every month assets/ETF/Stocks that will drop/go up sharply in case the real estate market goes south. not looking to make a 1:1 ratio on the drop value, in case of a drop I will not sell the real estate. I am just looking for ideas to "Insure" the value (and willing to pay a price every month).
Any ideas?
This may be more of a securities market type topic than real estate topic. Check with a knowledgeable securities broker about "options" trading. They may be able to put you into something that will benefit you if the residential real estate market heads south.
Personally, I wouldn't be too concerned if I were you. Your rentals are owned free and clear and you have a good cash flow position. Even if housing prices drop, there is still going to be strong demand for residential rentals.
If prices go up in my area and I lose my investment in the "Insurance", I am ok with that, I want to protect myself from a 2008 scenario where everything is going down.
I understand that the ETFs are daily ETFs which makes them not attractive for a long-term investment.
Not true at all . Etfs are fine , it is inverse etfs that are not good for a long term hold .
About the best you can hedge with against a 2008 calamity is long treasury bonds and gold …..Etfs Tlt and Gld.
But a 2008 drop because of rising inflation and rising rates would make those not good choices …
You do that by owning your properties free and clear. When values go down you hold them until values go up again. You still have the cash flow.
It all depends ….heck the poconos were a hot area back when we bought in 2007 …we sold in 2012 …the area is first coming back to where we sold 9 years later ..
So holding may be a poor choice if there are better opportunities elsewhere ……we could have doubled that money in our other investments vs had we just held that property
What about a Short Basket of Homebuilders...KBH, LEN, etc. ? Run the data on residential and run the data on this basket over time, then see how well they are correlated (the "R" Squared). Might be informative, if nothing else.
Home builders do well when housing does well and they stink when housing does
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