You Need A MOB Mentality Also

I spoke with a financial counselor at my bank PNC about Real Estate Investment Trusts (REITs), and although he indicated that a portfolio shouldn’t occupy more than 10 percent of one's investment as REITS... he threw in a "However...during rare times."  It is the best of times and it is the worst of times.

He also indicated REITs as an excellent option for diversifying a portfolio: low interest rates, a strong potential for inflation, lots of available capital and real estate bargains. He emphatically stated “it is a smart tactical move to have higher REIT allocations for the next five to seven years, but then he said “investors need to be very careful.”

Knowing that a veritable market is available when one opts with REITs as the other game in real estate that culminates more equity and interest income; I had to perform a due diligence for long term…so I first queried Bigger Pockets web site on REITs and then accessed  the Dow Jones REIT Index which has doubled since its spring of 2009 bottom, the culmination of a 75-percent decline that began with the recession in 2007.

Is this Right? Should Investors need to be concerned with REITs for long-term success?

Wide World Of REITs Explained

What I deemed significant is that the REIT world is based on companies investing 75 percent of their assets in real estate, to get at least a 75 percent of gross income from rents or mortgage interest, but to pay out 90 percent of taxable income in dividends,

Since REITs can invest in properties, mortgages or both. They can be broadly diversified or focus on a geographical area and/or particular sector, from retail to residential to hospitality to agriculture.

Whereas, Exchange-traded funds (ETF) REITs are very liquid. There are no minimum investments or net worth qualifications, as there are with private REITs. (Though some private REITs have minimums as low as $2,500.)

With all this in mind, savvy investors are paying attention to medical office buildings (MOB) as a niche market. WHY? As a health professional with 30-years related experience in health and wellness; while I am not yet an investor in REITs relative to MOBs there is a desire to learn more.