May 11, 2023
And just like that, California’s “Dream for All” program turned into “dream on, y’all.”
The historic home loan program drained its $300 million budget just 11 days after applications opened in April. Really, can you blame the 2,000-plus homebuyers who moved at supersonic speed to land this Golden State opportunity? Trouble is, thousands of other hopefuls were shut out just as fast.
Don't miss
- Here's how much money the average middle-class American household makes — how do you stack up?
- You could be the landlord of Walmart, Whole Foods and CVS (and collect fat grocery store-anchored income on a quarterly basis)
- 'Hold onto your money': Jeff Bezos says you might want to rethink buying a 'new automobile, refrigerator, or whatever' — here are 3 better recession-proof buys
The idea of Dream for All is simple: the state makes the down payment for your home in exchange for a share in its value when it’s sold, refinanced or transferred. The program is designed to make homeownership more accessible to disadvantaged groups historically shut out of the housing market, in particular Black and Latino families.
Advertisement
But apparently that's now how things shaked out. Data obtained by CalMatters shows a disproportionate amount of loan recipients — about two-thirds — identified as white. About 18% identified as Asian and 4% as Black. Ethnically, only 34% identified as Latino.
“Clearly more work needs to be done to make sure that there is statewide awareness, particularly in communities of color,” California Senate President Pro Tempore Toni G. Atkins said in a statement.
The pace at which funds for Dream for All were drained shows just how hungry people are to get into the California housing market.
If you’re an investor on the real estate sidelines for any number of reasons — from the current high mortgage rates to stratospheric real estate prices — you still have options for getting involved in the market. Here’s how.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
These REITs are sweet
In California as elsewhere, a real estate investment trust (REIT) offers an avenue for any investor to take advantage of a robust market.
In fact, the Securities and Exchanges Commission (SEC) states that REITs must pay out 90% of all taxable income to shareholders annually. This usually comes in the form of dividends, which provide an excellent source of income. Here are three to consider.
1. Essex Property Trust
The Essex Property Trust (NYSE: ESS) is an apartment ownership entity located primarily in northern California, Los Angeles and Orange County (as well as Seattle).
Essex stock has already excelled in 2023. It continues to beat earnings estimates; in the first quarter of 2023, net income per share hit $2.38 (compared to $1.12 in 2022). Its funds from operations (FFO) have already jumped 8.3%, with dividends up 5% — the company’s 29th consecutive annual increase. That puts it well within dividend aristocrat status.
Advertisement
The results led ESS to increase its full-year guidance, with the trust aiming for a net income per diluted share between $6.36 and $6.74. It now offers a dividend yield around 3.9%, yet also provides a potential value play with shares down 7.5% year over year.
2. Prologis
While apartments and residences certainly appeal to investors, logistics real estate also holds promise. Prologis (NYSE: PLD) works markets for business-to-business, retail stores and online fulfillment locations.
Located in San Francisco, Prologis oversees 5,000 buildings comprising 1.2-billion square feet in 19 countries across North America, Latin America, Europe and Asia. It continues to acquire new businesses as well, along with properties and development projects. So while you get exposure to California, you also benefit from a highly diversified global property portfolio.
Prologis stock continues to show resilience thanks to high occupancy rates. It holds a dividend yield around 2.9%, and year over year is up 8.9%.
3. Medical Properties Trust
Medical Properties Trust (NYSE: MPW) is one of the largest hospital real estate owners in the world, with 444 facilities in 10 countries and several in California. It continues to focus on growth through acquisitions and recapitalizations.
What’s great about hospitals? They hold long lease agreements and high occupancy rates. Medical Properties Trust allows these hospitals to unlock the value of their real estate so the locations can upgrade themselves. This increases value to the trust in the process, allowing for a significantly high dividend yield.
How high? Medical Properties Trust offers a whopping divident yield around 12.7% — though that may not last as shares are down 36.4% year-over-year.
No matter which option you choose, there are certainly smart ways to get in on real estate in California — and by connection worldwide. But instead of buying properties you’ll buy shares — and rather than move into a home, you’ll move in on profits and dividends that could potentially help you buy one.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Amy Legate-Wolfe is an experienced personal finance writer and journalist. She has a Bachelor of Arts in History from the University of Toronto, a Freelance Writing Certificate in Journalism from the University of Toronto Schools, and a Master of Arts in Journalism from Western University. Amy has worked for Huffington Post, CTVNews.ca, CBC, Motley Fool Canada, and Financial Post. She is skilled at analyzing trends and creating content for digital and print platforms. In her free time, Amy enjoys reading and watching British dramas on BritBox. She is a mother and dog-mom to a Wheaten Terrier.
