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2 Great Residential REITs to Buy in 2022

There's a supply and demand imbalance in housing in the United States. Multifamily vacancy rates are extremely low, and rents are on the rise. In this Fool Live video clip, recorded on Jan. 14, contributors Matt Frankel and Jason Hall discuss two of their favorite real estate investment trusts, or REITs, to play residential real estate in 2022.

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Matt Frankel: Multifamily is the next one, or residential. Whichever you want to say, it means the same thing for the most part. What do you think about this? The housing market in the U.S. is just crazy right now.

Jason Hall: That's wonderful for REITs in this space because the bottom line is that there are a lot of people that are getting priced out of the housing market, and as we continue to see economic recovery, right in the stabilization of the economy, as we see things like immigration continue to normalize. More people come into the country, there's just going to be more need for housing. We're very underbuilt right now and that's great for these folks.

There's one that I'm really interested in that I don't own. It's near its all-time high, but it's a business that I'm really curious to learn more about and that's why I have put it on here. That's Sun Communities (NYSE: SUI) ticker SUI. This is one that's been around for a long time. It's like a 30-year-old business. I think it's been around since the '90s, but they focus on mobile home and RV sites and then marina. So, you think about slips in the water and then think about dry storage for boats, that's their focus business. You'll see that's why they are up here in Ontario and around the Great Lakes.

It's a big part of their business because there is a ton of that out there. But they're also in big markets, Florida, Texas, California. I think we're going to see part of that same baby boomer trend that retirement trend as we can see that play for people that are trying to move maybe to more of like the Sun Belt area for leisure, for second homes, and that sort of thing. I think that could actually be a good demographic trend that helped drive this business. The stock is near an all-time high right now. A lot of other investors are thinking the same thing I am. But I really want to dig into this one and learn more because I think the trends look really good for this business.

Frankel: I love Sun Communities by the way. I like American Campus Communities (NYSE: ACC) in 2022. They are the student housing real estate investment trust ticker symbol, ACC. They build purpose-built student housing communities either near campuses or on-campus. They also like Life Storage (NYSE: LSI) have a third-party management business. Jason, you know you're still sharing your screen. [laughs]

Hall: Sorry. I was going to share this at the very end. l had a couple of people asking about the tickers. Go ahead.

Frankel: But anyway, American Campus Communities student housing, the trends are really favorable, especially in 2022. The lowest new supply of student housing in more than a decade is coming on the market in 2022 and college applications are supposed to rise by double-digits following the pandemic disruptions. So really great fundamentals right there, and they are just performing fantastically.

Jason Hall owns American Campus Communities and Life Storage Inc. Matthew Frankel, CFP® owns American Campus Communities. The Motley Fool owns and recommends American Campus Communities and Sun Communities. The Motley Fool recommends Life Storage Inc. The Motley Fool has a disclosure policy.


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