Why does spam continue to roll into our in-boxes? Why do credit card offers continue to be my #1 source of junk mail? Because they work. People keep clicking (the spam) and applying for credit cards (the junk mail).
The same can be said for investments. The stock market gets battered but money pours in. Why? Because it works. Someone is making money or nobody would be doing it. But is the stock market the only place to send our hard earned cash? Of course not. There are alternatives.
What about self-storage buildings, cell towers, and parking facilities? Well, according to a recent Wall Street Journal article…
Such unglamorous niches, once shunned by the investing elite, are performing well in 2010, even as the Dow industrials limp along.
Why haven’t we, the middle investor class, heard of these investments yet? My first inclination is that we’ve been spoon fed by financial “experts” and mutual fund companies for so long that these types of investments are too weird. Cell tower? For real?
Or, it may be because the big 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.
Before you get too excited, these types of investments aren’t the same as trading stock online. They’re physical properties.
In general, these offbeat commercial-real-estate ventures should be viewed as long-term holdings, not short-term flips—and as alternatives to dividend-paying stocks and bonds.
But for income-oriented investors willing to put in the leg work, these properties can generate annual returns of 5% to 9%, say experts. In some cases, they also confer tax advantages.
One of the more interesting investments? Railroad rights-of-way.
Brent Hayes thought so. Mr. Hayes says he has amassed a fortune of more than $17 million in part by buying abandoned rail lines from CSX Corp.
Mr. Hayes improved the properties he bought by removing the railroad ties. He mostly sells the land to investors and keeps some for his own development. Hmm. Who would of thunk it?
Read more about these alternative investments.