Amancio Ortega never went to college.
His father was a railroad worker, and his mother was a maid.
But he ventured into a different industry and mastered it from the ground up – clothing and textiles.
From delivery boy… to tailor’s assistant… to store manager… He eventually worked his way up to cofounding Inditex, the company that owns Zara.
The first Zara store opened in 1975. And thanks to Ortega’s leadership, business skills, and lessons learned at every step, it had 100 stores in Spain a decade later.
Today, there are nearly 3,000 Zara stores worldwide. And pioneering the trend of fast fashion has made Ortega one of wealthiest clothing retailers in the world.
With an estimated net worth of $88.6 billion, Ortega sits at No. 13 on the Forbes list of richest people.
And although he’s now retired… he’s growing his net worth every day, using our favorite method at Wide Moat Research: passive income.
More than a rags to riches story, there’s something this savvy and compelling businessman is doing I want to draw your attention to.
Recently, Ortega made a change to his investment strategy. And it’s one other billionaires around the world are making, too.
Today, I’ll tell you what these successful and wealthy individuals are seeing… And give you one way to get in on the latest trend they’re betting on right now.
Billionaires Are Targeting This Investment
After retiring from Zara and handing control of the company to his daughter in 2011, Ortega hasn’t been sitting still.
But instead of spearheading a business, his focus is now on investing. And he’s proven just as skilled at that as he did as a fashion CEO.
Forbes estimates Ortega rakes in $400 million annually in dividends.
Over the past decade, he has been using his investment fund Pontegadea to increase his fortune by investing in real estate.
Previously, Ortega preferred to invest in high-end office buildings. But recently, he’s been scooping up real estate in a different sector – apartments.
Last year, Pontegadea paid $500 million to buy 19 Dutch Street Tower – a 64-floor luxury apartment complex in New York City.
Earlier this year, it invested $108 million in Opus 6 Hanover Quay, a luxury apartment building in Dublin, Ireland.
And in August, it spent $232 million on 727 West Madison Street, a luxury apartment tower in Chicago.
Ortega isn’t alone either. Israeli billionaire shipping magnate Eyal Ofer is also buying up apartments. So is another billionaire, former hedge fund manager Tom Steyer.
So what about this trend is capturing the ultra-wealthy’s attention?
Why Apartments Are a Good Investment Right Now
In recent months, apartment prices have tumbled.
One reason is that interest rates have increased, so investors are demanding higher returns on their money.
Another reason is that a wave of newly built apartments is hitting the market. These buildings started construction in 2021, when apartment rents jumped 18% in a year.
Now, they’re looking for buyers.
That means it’s a great time for long-term investors to snag properties at low prices. A recent report from government-sponsored mortgage lender Fannie Mae forecasts that apartment values will bottom out by early 2024.
Historically, income from apartments has been great at keeping up with inflation because they can quickly increase rents to match the pace. And real estate values tend to rise over the long term as construction costs increase.
So how can you join these billionaires and profit from apartments without over $100 million dollars in your bank account?
Today, you can add apartment exposure to your portfolio by buying shares of AvalonBay Communities (AVB).
AvalonBay is a real estate investment trust (REIT) that has a portfolio of over 88,000 apartment homes.
As a REIT, AvalonBay is required by law to return 90% of its taxable income to shareholders through dividends.
That means you can collect a steady stream of income from apartments without all the usual headaches of being a landlord. AvalonBay deals with all the noisy tenants, broken toilets, and property taxes while you watch the dividend checks roll in.
AvalonBay shares yield 3.8% and trade at 18x adjusted funds from operations (AFFO).
AFFO is a financial metric that gives investors a picture of the cash a REIT has available for distribution to shareholders.
At 18x AFFO, AvalonBay is trading at a 25% discount in comparison to its historical average of 24x AFFO.
So it’s a great time to buy.
And for members of our Intelligent Income Investor service, I have another apartment REIT recommendation.
It’s even cheaper than AvalonBay, trading at just 15.5x AFFO. It also has a higher yield of 4.3%, and it’s grown its dividend every year for 13 years in a row.
A long dividend growth streak is a good sign that a company is managing its business well and prioritizing shareholder returns.
To find out the name of this apartment REIT, read on here.
Whichever option you choose to go with, you’re in good company with billionaires like Ortega. He wouldn’t be buying if he didn’t see huge gains ahead.
Don’t miss this discount window.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily