How Hawaii real estate and banking may be more secure in a post-Trump era
Real estate and other financial services are a big part of the economy.
They account for more than 60% of the country’s GDP, making up almost two-thirds of all businesses.
And they are the backbone of our economy, generating about $3.5 trillion in sales each year, according to the Federal Reserve.
But in the years after the election, a new strain of anxiety has gripped the real estate sector.
As investors seek security, regulators are tightening up, and some lenders are scaling back their lending.
What’s the best way to protect your investments in real estate?
The answers may depend on the type of real estate investment you’re considering.
“Real estate investments are the most risky because they have a long history and are susceptible to a number of risk factors,” says Mark A. Reitman, a professor of business administration at the University of Delaware who has researched the real-estate sector.
“If you are a buyer who’s looking to buy a new home, you should be looking for something that’s not backed by a mortgage, or that’s a long-term investment.
If you’re a seller, you’re looking for a mortgage or a loan, not real estate.”
Real estate investment trusts, or REITs, are similar to traditional banks but are different from traditional mortgages.
They are owned by investors who, like REIT investors, hold a bank’s mortgage, usually the federal government’s.
These investors also receive a percentage of the value of the property they’re buying, which means they are not tied to the lender.
A REIT’s portfolio can range from $100 million to $10 billion.
But REIT interest rates can be high, sometimes double or triple what they are on a conventional mortgage.
That makes REIT investments particularly risky, because it creates uncertainty for investors and the economy, and they also tend to be volatile.
So what are REIT loans?
These are loans that are backed by the Federal Deposit Insurance Corp., or FDIC, and are generally available to anyone who is willing to borrow against the properties.
For a traditional mortgage, the lender holds the deed and the title, but the REIT can borrow from the bank.
These loans are not backed directly by the bank and can be backed by any of the banks that the borrower owns.
In addition, REIT banks can lend to businesses that have no bank ties, such as construction companies or health care companies.
These companies generally do not have to be owned by the banks to borrow, so they can borrow against their properties.
“We’re not just talking about loans to a single borrower,” says Chris Pascarella, an investment strategist at Bancorp.
“There’s an incentive for these banks to be lending at higher rates because they are getting back a larger portion of the return on the investment than if they were just lending to a company.”
In addition to being less risky, REITS have a higher return on investment than traditional mortgages, which are typically a higher percentage of income.
“A typical REIT loan is 20% of an investor’s income, compared with 12% for a conventional loan,” Reitmans said.
“You’re paying for the interest over 20 years, but if you take that interest rate into account, the return from the investment is about 20%.
So there’s a real return on that investment.
That is an incredibly attractive yield, especially in a low-risk environment like this one.”
There are other factors that make REIT investment investments less risky than traditional loans.
In fact, REit bonds are typically not considered a traditional bond because they’re not backed on a mortgage.
Instead, REits are a new form of corporate bond, which is similar to an S-corp or a corporation, but with more risk and a shorter maturity period.
The difference is that these bonds can’t be sold to other companies.
And the interest rate is usually much lower, typically less than 1%.
“With REIT bonds, the value is built in, so you have the potential to get the return that you’re expecting, and that’s the thing that makes them so attractive,” Pascatellas says.
“They’re a low cost, low risk investment.”
In contrast, a conventional bond is typically backed by something called a 10-year Treasury note, which usually has a maturity of 20 years.
But unlike REIT notes, the maturity of a 10th-grade bond is fixed, and it doesn’t have a fixed yield.
A 10-years Treasury note is backed by 10% of its value over the course of the 20 years the bond is held.
If the bond runs out, it’s gone.
“The bond is an insurance policy for your assets, and a 10% return over that time period is more than enough for most investors,” Piscatellas said.
The downside of REIT and traditional mortgages is that they can be very volatile.
If a REIT defaults