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Avoid The 3 T's: Essex Realty Vs. Avalon Bay

Jun. 14, 2020 12:44 PM ETAvalonBay Communities, Inc. (AVB), ESS74 Comments


  • We'll be comparing two of the world's best multi-family apartment REITs to see whether one (or both) of these names make sense for investors to own.
  • The primary risk that we see with ESS is its lack of geographic diversification.
  • AVB's portfolio offers exposure to quite a few more markets than ESS's.
  • Both ESS and AVB offer strong, safe yields, attractive valuations, high-quality portfolios and management teams, and above-average historical results.
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

If you've ever found yourself paying rent, you probably also found yourself wishing that you were the landlord, right?

It feels so bad to hand over a rent check every month, knowing that your hard earned money is building someone else's equity in the property that you inhabit.

Yet being a landlord is not exactly a simple or easy job to have.

There are taxes and maintenance costs (i.e., trash collection and toilet repairs) associated with owning physical property. Incidentally, that's what we call the 3 T's (taxes, toilets, and trash).


There are tenant risks and periods of downtime in between them, meaning that the landlord has to foot the mortgage bill (the bank is not going to give a landlord a break just because they're in between tenants). And physical property is not a very liquid asset to own.

As the size of one's physical property empire grows, so do the problems, costs, and risks that might potentially occur. It's these problems, costs, and risks that drive so many would-be landlords into the REIT space of the equity market.

Sure, by doing so investors are not likely maximizing their return potential, but by passing along the responsibility of property management to well trusted and seasoned management teams, they're certainly making their lives much simpler and easier.

Life is short and stress is bad therefore, it oftentimes makes more sense to take the REIT route if you're interested in having exposure to real estate in your investment portfolio.

In this piece, we'll be comparing two of the world's best multi-family apartment REITs to see whether one (or both) of these names make sense for investors to own.

These two companies are Essex Property Trust (NYSE:ESS) and AvalonBay Communities (NYSE:AVB).

Essex Property Trust: Bullish Background

We've covered ESS several times

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This article was written by

Brad Thomas profile picture
Leader of iREIT on Alpha
The #1 Service For Safe and Reliable REIT Income

Brad Thomas is the CEO of Wide Moat Research ("WMR"), a subscription-based publisher of financial information, serving over 100,000 investors around the world. WMR has a team of experienced multi-disciplined analysts covering all dividend categories, including REITs, MLPs, BDCs, and traditional C-Corps.

The WMR brands include: (1) iREIT on Alpha (Seeking Alpha), and (2) The Dividend Kings (Seeking Alpha), and (3) Wide Moat Research. He is also the editor of The Forbes Real Estate Investor

Thomas has also been featured in Barron's, Forbes Magazine, Kiplinger’s, US News & World Report, Money, NPR, Institutional Investor, GlobeStreet, CNN, Newsmax, and Fox. 

He is the #1 contributing analyst on Seeking Alpha in 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, and 2022 (based on page views) and has over 108,000 followers (on Seeking Alpha). Thomas is also the author of The Intelligent REIT Investor Guide (Wiley) and is writing a new book, REITs For Dummies. 

Thomas received a Bachelor of Science degree in Business/Economics from Presbyterian College and he is married with 5 wonderful kids. He has over 30 years of real estate investing experience and is one of the most prolific writers on Seeking Alpha. To learn more about Brad visit HERE.

Analyst’s Disclosure: I am/we are long ESS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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