Invest in companies that own or manage real estateAuthor(s): Albert JakiraSource: ABA Journal, Vol. 71, No. 5 (May 1985), p. 88Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/20758135 .

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Your Finances_

Invest in companies that own or manage real estate

Corp., Louisiana Land & Exploration Co., Crown Zellerbach Corp., and Pot latch Corp. (on the New York Stock

Exchange); and Alexander & Baldwin Inc. (on Nasdaq).

Here are some of the few guarantees available in the investment world:

The stocks of these companies will not perform equally well, and those that do perform exceptionally well will not all do so at the same time.

It is unlikely that you can achieve adequate diversification unless your port folio includes at least five, and preferably 10, stocks of this kind.

Try Sharebuilder This program can be done conveniently

even by the investor who can commit only small amounts of money. One vehi cle that has advantages over the tradition al method of purchasing odd lots in a regular brokerage account is the Sharebuilder account offered by Merrill Lynch (for information, call (800) 221 2856). It allows you to purchase as little as $25 worth of a security at a time at commissions that are lower than those for odd-lot purchases. Just as important, Sharebuilder will reinvest any dividends on stocks in your portfolio, at a nominal commission, to allow you further accu

mulation and price averaging. This fea ture is more convenient than attempting to reinvest through a separate dividend reinvestment plan for each company, as

suming the company offers one, although it does not offer the modest price advan tages provided by some other reinvest ment plans. There are limitations on Sharebuilder, which are enumerated in the Sharebuilder application and bro chure. You should read these carefully before opening an account.

A program of this type is well suited for most investors. The specific amounts you commit should be determined by your income and net worth, as well as a review of what portion of your portfolio is al ready committed to other real estate in vestments. The risks are reduced by the program's diversification and cost averag

ing. The potential rewards of growth of capital and prudent diversification of your assets are considerable.

_^Journal Albert Jakira is a money manager and is

president of Jakira Financial Servicesy in vestment advisors, in New York City. The views expressed in this article are his own.

By Albert Jakira

Many of us are familiar with real estate's touted advantages as an investment, as a

hedge against inflation and as a portfolio diversification tool. "Buy land, they're not making any more of it," is part of our lexicon. But many investors also have

learned, sometimes painfully, of the pit falls of land ownership. You may know someone who bought a plot "right next to" an area that has begun to flower? and who may still be waiting in vain with an investment that has failed to appreci ate, that may have negative cash flow and for which there may not be any current buyers.

Various forms of real estate also are

vulnerable to economic cycles, interest

rates, demographic shifts, and changes in the political and regulatory climate of specific regions and municipalities.

A cachet of quality Yet real estate maintains much of its

cachet as a quality investment, and, I

believe, rightfully so. History shows that well-chosen realty investments do appre ciate over the long term and can provide a fairly regular and perhaps growing income. These investments are available, even to the small investor, by following the twin disciplines of diversification and cost averaging. Accumulate real estate

that is diversified geographically as well as by type (undeveloped land, timber land, commercial, residential and so

forth), and buy it methodically over a period of time to offset in part the effects of price fluctuations.

If you think of real estate only in terms of outright ownership of individual prop erties or limited partnerships, this advice will appear unrealistic. There is an alter native: the purchase of common stocks of companies that own and manage real

property (such as equity real estate in vestment trusts, known as REITs) and of

companies that are in another primary business but whose assets include signifi cant real property. While this strategy does not have the tax advantages of out right ownership or limited partnerships, the investment potential and the better

relative liquidity more than compensate for this.

A wise investor should purchase small amounts of common stock of a diverse

group of companies over an accumulation

period of at least two years, preferably longer, and hold them and reinvest the dividends in further stock purchases for at least three more years before making

any sales.

Worth investigating Which stocks? Some that are worthy of

investigation are New Plan Realty Trust and New Mexico & Arizona Land Co. (on the American Stock Exchange); Stor age Equities Inc., First Union Real Es tate Investments, Bank America Realty Investors, Santa Fe Southern Pacific

Corp., Norfolk Southern Corp., Burling ton Northern Inc., Union Pacific Corp., Texas Pacific Land Trust, James River

88 ABA Journal, The Lawyer's Magazine

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