Question about reits

8 Replies

Hey guys I'm jamie I'm new to this site and it's great to be here. I'm Intrested in learning about investing in reits. I have seen many company's offering a variety of reits and just wanted to see if anyone had any insight on reits??

I am just starting off as a investor an was just exploring a variety of investing options

@Jamie Brown

Reits trade like stocks. But their charter has them pay out a large % of their profits as dividends. Reits can be made up of various real estate portfolios like malls, golf courses, retail plazas, etc.

They are negatively impacted by falling interest rates and most of their stock prices plummeted during the real estate bust and haven't recovered since the interest rates are still low and commercial businesses aren't doing as well as they used to.

@Jamie Brown  this is a good book to start with. It explains about the different kinds of REITs and how to value them (because of things like depreciation the normal price/earnings ratio that you would use for stocks doesn't work for reits).  You can learn a lot from reading articles too. Look at the REITs invested in famous investors like Sam Zell (the Equity Group), or Seritage (Eddie Lampert). Property development companies are also interesting too Berkowitz (St Joe) or Ackman (Howard Hughes Corp) are big land owners. Try to look at what they own and what they are doing and see if you see what they see in the properties.  For instance, Nexpoint (NXRT) buys C property apartments and fixes them up into B apartments and raises the rents. Business is business and it's a lot easier to learn how a good real estate company operates and see if you want to invest than it is to figure out how a drug company or microchip maker is worth investing in.

I have several REITS and so far.. they are all amazing. I look for REITS that have a low stock price and high dividend.  They are easy to sell if you need the money and offer solid consistent returns. 

I also have some regular stock and at the risk of putting all my eggs in one basket I am considering selling. They are just horrible. Up down up down.. never make any consistent gains.  My Reits have all increased in value or stayed at the same price. 

If you are unsure/having trouble selecting an individual REIT to invest in I would suggest taking a look at a REIT index fund like VNQ or USRT. These ETFs are very diversified since they own a large number of publicly traded REITs. I used to own Realty Income Corp (ticker symbol is O) and the stock was able to provide me with a solid stream of monthly dividends and some capital appreciation as well. I decided to sell a couple years ago so I could be more diversified in the REIT space, but I was very happy with my gains once I did sell.

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