All Forum Posts by: Danny Diaz

@Danny Diaz 

In my experience, REITS have been an excellent investment vehicle, particularly in 2014 (took some time to speed up, corporate stocks did much better in 2012-13). They have actually been my strongest performers in the last 3 months.

They basically behave like a stock for me. However, some come with higher dividends than a corporate fund. As mentioned, the lower correlation with stocks is desirable.

I am keen to note that you don't get a lot of the 'Sweet Extras' you get with physical real estate investing. Buying under, fixing up, then renting at market value, taking advantage of loan vehicles (FHA, VA, Tax Credits). These are all great tools at the disposal of individual investors like you and I. REITS are large companies. Their investments often reflect larger (cyclical) trends in a market. Their ability to analyze something deal by deal has its limits, due to their large scope.

I like to think of them as the dinner guest that eats a ribeye steak, but leaves a ton of meat on the bone. You and I can see (and eventually taste) that meat. That is a big advantage of personal real estate investing.

@Danny Diaz 

I own several REITS. Couple domestic, one foreign.

Particularly in the traditional real estate investing community, there are many different opinions on the value of investment products (those traded on stock exchanges). I don't want to open up that debate here. Let's just understand that I believe stocks, bonds, funds, and physical real estate can be used to build wealth. I also believe that the whole is greater than the sum of the parts.

I use REITs as another way to diversity my stock portfolio. It makes up a smaller percentage than my corporate stocks, but it tends to have a lower correlation with corporate stocks and bonds, and that provides strength through diversity. 

I treat my physical real estate as a separate category. Thus, while I invest in REITs on a weekly basis, I do not consider any of that investment as a contribution to my real estate goals. Instead, I view it the same way I would a stock purchase. There are some who would disagree with this distinction. I think it's keen to note that when you buy a REIT, you are buying shares in a company that purchases and manages real estate. For this reason, I think of it like a stock.

Hope that's helpful. If you want to talk about more of my philosophy on the relative value of these products, feel free to send me a message.