Thinking Outside the Stocks (Investments outside of stocks/bonds that are giving good returns)

Wall Street Journal ^ | 09/05/2010 | M.P. Mcqueen

[SeekAndFind]

There is always a bull market somewhere. With the stock market continuing to whipsaw and bonds getting ever-pricier, investors are looking further afield for decent returns—and some are finding them.

Self-storage buildings, anyone? How about abandoned railroad beds, cellular towers, student apartments or parking facilities? Such unglamorous niches, once shunned by the investing elite, are performing well in 2010, even as the Dow industrials limp along.

If you haven't heard about these seemingly arcane plays yet, it may be because the smarter money is getting there first. In some cases, private-equity firms, pensions and college endowments, which are cutting their exposure to stocks, are looking into these and other offbeat investments.

Just ask Ken Nitzberg, chairman and chief executive of Devon Self Storage Holdings LLC in Emeryville, Calif. He says he is fielding more calls from investor groups, and has partnered with institutional investors including the State of Michigan Retirement System and Goldman Sachs Whitehall Funds. He also manages properties for college endowments and high-net-worth families.

Mr. Nitzberg says he got into self-storage in 1993. Initially, "we looked down our noses at it," he says. But after his first venture—the conversion of a strip mall into a self-storage facility—produced a solid return, he was hooked. Since then, while other investors fixated on stocks or more upscale real-estate projects, Mr. Nitzberg has focused on storage. He says the company now owns or operates 48 facilities in 12 states.

Mr. Nitzberg says many of his properties are producing annual returns of 8% to 10%, and a few are exceeding 15%, "which in a 3% Treasury world is pretty good."

[SeekAndFind]

Student Housing: REITs and private investors are scouting out big apartment complexes close to universities. They can generate 7% to 9% annual returns with lower risk than other apartments because parents co-sign the leases

Self-Storage Facilities: One of the fastest-growing sectors of commercial real estate, these low-maintenance properties can generate annual returns of 9%, or more in some locations.

Cell-Tower Leases: Owners of well-situated properties can extract additional income by leasing land or roof space to wireless companies for cellphone antennae. Leases generally range from $300 to $3,000 a month, per antenna.

Parking Lots: Annual returns of 6% to 8% are possible, and the land can be converted to higher-yielding properties in the future. Also: Owners can raise rates on short notice, making the investment a good inflation hedge.

Railroad Rights-of-Way: There could be more than 100,000 miles of old railway in the U.S., much of it abandoned and selling cheaply. The land is often ripe for future development.

[omega4179]

Self Storage units are a good government proof enterprise, there just aren’t enough employees for them to regulate you out of existence.

[mylife]

I know some folks that have cell towers.
They are very well off and live a life of leisure.

[SeekAndFind]

RE: Self Storage units are a good government proof enterprise, there just aren’t enough employees for them to regulate you out of existence.

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The main risk ? Barriers to new competition are low, and new rivals can drive down rents in some markets.

If you don’t have money to own all of a self-storage unit, there are REITs that you can own via the exchange traded funds.

Here are a few :

EXR (Extra Space Storage Inc)
PSA (Public Storage Inc)
SSS (Sovran Self Storage)

[mylife]

1k a mo per antenna/repeater

[Krankor]

Bed bug sniffing dogs. You get a few of them, and you can write your own ticket.

[SeekAndFind]

Some drawbacks to cell tower ownership :

* The towers cause additional liabilities and obligations for landlords, including insurance for property damage or personal injury.

* Lease-contract clauses generally give cell-phone companies the right to terminate agreements with just 30 to 90 days notice.

* Towers also are politically controversial in many communities.

[SeekAndFind]

RE: Bed bug sniffing dogs.

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Where do you get dogs like these and where are deployed ?
How do they make money ?

[mylife]

Hey. Nothing is easy. ☺

[Krankor]

Gigolos. With the aging of the baby boomers, there’ll be a plethora of unmarried, widowed and divorced women. Gigolos will be in demand to satisfy their need for companionship. A good gigolo can pull in an annual 8 to 15% return.

[Krankor]

http://www.nytimes.com/2010/03/11/garden/11bedbug.html

[Palter]

‘self-storage’?

Serious?? People who have bought extra junk with credit. Now are in debt. I go to self storage auctions all the time. People are abandoning their storage units left and right.

[dalereed]

Making 8% on rental property, purchased for cash.

Won’t buy with a mortgage under any condition!

[LostInBayport]

"Don't I know it, buddy. Don't I know it. Heh heh."

[spokeshave]

...try goat green environmental grass and weed eaters...

You also get great milk...make some feta cheese and extra animals for the freezer.

[Think free or die]

I don't think I'd be in a great hurry to invest in student housing with the expanding problem of bed bug infestation.

We know someone who got into the self-storage business about 6 years ago. I think it has gone very well for him. Access to the facility and security are fairly automated, and I've never seen more than one employee on site at any given time. Pretty simple business model.