Why this housing option is a smart alternative to assisted living
Ric Edelman: It's Wednesday, November 8th. Your mom can't really live alone anymore, can she? She needs someone to look in on her and be available anytime for help with bathing, dressing, cooking. But mom doesn't need full blown assisted living services and she doesn't want to go to a nursing home. She doesn't even want to move in with you. She likes her independence and her privacy. So what do you do? Enter ADUs – accessory dwelling units. These are freestanding miniature homes that you can add to your house or property. These ADUs are as small as 500ft², as big as 2,000ft². They can be a standalone structure that you put in your backyard, or they can sit above the garage or downstairs in the basement. They cost as little as $35,000. States around the country are encouraging the development of accessory dwelling units because it eases the burden on nursing homes. California, Oregon, Maine have all passed laws encouraging ADU construction.
And they're not just for mom. Some people are installing them and renting them out, creating rental income. Some people use them for out-of-town guests or as a home office or a hobby shop. Builders are adding them as options on new home construction. One builder in California says 20% of buyers add these to their houses at a cost of $80,000 to $100,000. That's nothing if you're already building a house for $1M or $2M. ADUs, accessory dwelling unit – I bet there might be one in your future. If you don't build it, you might find yourself living in it.
Hey, let me tell you about a different kind of real estate than an ADU – a DC REIT. A data center REIT that's a real estate investment trust, REIT, that owns and operates data centers. These facilities house the computer systems and servers that power our internet. That's how we all get to enjoy internet access, not just here in the US, but worldwide. Data center REITs are pretty new. They're fast becoming popular because the demand for data storage keeps growing. REITs real estate investment trusts are popular because they let you have an investment in real estate without the hassles of actually owning and managing property. They kind of look like mutual funds. Investors pool their money and the fund manager buys and manages the investments for you.
You can buy these REITs in an ordinary brokerage account like at Schwab, just like you can mutual funds and ETFs. Most REITs buy homes or office buildings. Data center REITs only buy buildings that house IT equipment. These buildings are huge. They've got redundant power and cooling systems, so the computers that are inside them are sure to run 24/7 uninterrupted. The buildings have lots of security because these machines are storing, not just expensive equipment but everybody's data, which is priceless. In fact, there's a joke about these data centers that inside them you only find two living beings a man and a dog. The man's job is to feed the dog, and the dog's job is to make sure the man doesn't touch anything.
From an investor's perspective, data center REITs offer steady and predictable rental income, and it's a great way to diversify a portfolio. And instead of investing in just one data center REIT, you can invest in an ETF that invests in dozens of them, creating diversification. The Global X Data Center REIT and Digital Infrastructure ETF is one to consider. The symbol is VPN. Check out the Global X Data Center REIT and Digital Infrastructure ETF, Ticker VPN at globalxetfs.com. And if you're an investor, talk to your financial advisor about it.