3 Ways To Get High Yield From A Booming Residential Market

Seeking AlphaDividend Ideas3 Ways To Get High Yield From A Booming Residential MarketOct. 8, 2020 8:35 AM ET|| Includes: AGNC, AGNCM, AGNCN, AGNCO, AGNCP, BRG, DX, EQR, ESS, NLY, PCI, PTYby: Rida MorwaRida Morwa High Dividend OpportunitiesThe #1 Service for Income Investors and Retirees, 9-10% dividend yield.SummaryResidential real estate continues to enjoy very strong fundamentals despite the Covid-19 pandemic.
Homeowner equity is up, mortgage rates are down and apartment rent collections remain strong.
We look at 3 high-yielding picks that take advantage of these fundamentals.
Co-produced with Beyond Saving
Invest In Real Estate Now, Opportunity Won't Last
For the past few months, we have been discussing how strong the residential real estate market has been despite the economic impact of the pandemic. While Wall Street has been very skeptical, but the strength is undeniable.
Interestingly, while the fundamentals are proving to be very strong, many residential focused investments are very cheap, with many trading at multi-year-low valuations. Today we take a look at three different ways investors can take advantage of the strong residential market and achieve high-yields from this very strong sector.

Way #1: Non-Agency Mortgages
For single-family homes, homeowner equity continued to climb in Q2 2020 despite the pandemic. Homeowner equity increased $620 billion, or an average of $9,800 per home. This means that the number of mortgages that are underwater continues to diminish and the vast majority of mortgages are under 80% loan-to-value.

Source: Corelogic
Meanwhile, the price for investors to buy mortgages has materially declined. Investors today can buy mortgages cheaper, while the value of the collateral real estate is climbing.
One way investors can gain exposure to this is through non-agency mortgage backed securities ('MBS'). These are packages of mortgages that are sold to investors who then hold them, collect the... Read more