Buy-to-let could be dead. Here are two alternative property investments I’d consider

Over the past few years, the government has introduced a range of new rules and regulations for buy-to-let investors to follow. These, coupled with booming house prices, have made it harder than ever for buy-to-let investors to make money from the asset class.

With this being the case, I think investors would do better to look to publicly-traded real estate investment trusts (REITs) instead of rental property if they want to invest in the sector. Today, I’m going to outline two REITs I think could be great alternatives. 

Office income
My first pick is office owner Regional REIT (LSE: RGL). As its name suggests, the company specialises in buying commercial property outside of London. Management is mainly focused on buying office buildings in areas where there’s a strong demand for such properties. Across its portfolio of 150 properties, it has 850 tenants, many of which are blue-chip businesses on 10-year-plus leases.

Regional’s tenant selection process is driven by its primary goal of generating income for shareholders from a diverse property portfolio. Since its launch in 2015, the dividend, which is paid quarterly, has risen from 7.7p to 8.3p. At the current share price, that gives a dividend yield of around 8%. On top of this, at the time of writing, the stock is trading around book value so you can buy the shares for the same price as the property portfolio is worth.

To help boost growth, the company recently completed a £62m fundraising, which was quickly snapped up by shareholders who were happy to support Regional’s growth plans.

So, all in all, you can get an 8% dividend yield from this diversified office owner without having to pay a premium to do so. I think you’d be hard-pressed to get the same kind of return from buy-to-let property in the current market.

Niche market
My second buy-to-let property alternative is healthcare REIT Assura (LSE: AGR). This business owns a portfolio of primary care medical facilities across the UK, giving it an income stream from an extremely defensive real estate portfolio in a growing market. 

People will always need to visit doctors, so there’ll always be a need for medical facilities. But the average investor can’t buy primary medical care facilities on their own and that’s why I think Assura is such an excellent investment. For around 75p, you can buy a share in this business and get a steady stream of income from medical facilities.

At the time of writing, the shares support a dividend yield of 3.8%. Over the past six years, the distribution has grown from 1.82p per share to 2.55p. And City analysts are forecasting a further 10% increase for the current financial year.

Assura’s dividend yield might be below the market average, but I think that’s a reflection of how secure this income stream is, and is a discount worth paying. That’s why I would consider this unique property business as an alternative to buy to let.

More reading

  • 3 reasons I’d ditch buy-to-let property and buy FTSE 100 shares right now
  • Could this looming threat destroy RBS and every other FTSE 100 bank?
  • 2 reasons why I would buy Lloyds for my ISA at the current share price
  • Hargreaves Lansdown shares are down due to the Neil Woodford saga. What’s the best move now?
  • Stop saving, start buying dividend stocks: a simple plan to retire early
  • Top shares for 2019

Rupert Hargreaves owns shares in Regional REIT. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2019



item Finance: Buy-to-let could be dead. Here are two alternative property investments I’d consider
Buy-to-let could be dead. Here are two alternative property investments I’d consider Finance
Loaded All Posts Not found any posts VIEW ALL Read More Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy Table of Content