REIT Recommendations?

Question

Hello All!
I am looking to begin investing in REITs as my access to capital for "direct" real estate purchases is very limited right now.  Do you have any recommendations for REITs to invest in?  Or information on where I can research available REITs?  At this point, I really don't have a preference for the types of properties that the REITs invest in, although I definitely want at least some opportunity to invest in single family residential properties.  Any help or information would be greatly appreciated!

Brett Wehn · Answer

I have traded REITs for many years and have done well with some of the investments. I like the exposure to institutional quality real estate (shopping centers and large apartment buildings) with the liquidity offered by publicly traded companies. Most REITs own specfic types of properties such as land, retail, multi-family, office, and industrial.  I don't own any REITs right now because of my concern with buying stocks when the overall market is at an all time high. I'm a bit of a market timer. I watch the market carefully and intend to dive back in when the market corrects. You can build a nice steady stream of income from REIT dividends. Some companies like Realty Income (ticker symbol "O") even pay a monthly dividend. One of the best indicators of market direction is VNQ (as suggested by RyanA). It's also probably one of your safest bets as it holds virtually all publicly traded REIT's in the US. Pays a fair dividend too. Do your homework and learn the fundamentals. I watch for excessive debt levels and check debt ratings (available from Standard and Poors). One of the largest publicly traded REITs, General Growth Properties filed for bankruptcy protection in 2008 when shopping center vacancies soared and the company was unable to service their debt.

Jilliene H. · Answer

Sharetha - are you sold on REITs?  Another thing you could do is invest in private deals with a private real estate company.  That might be a good way to get exposure to SFRs.

Sharetha H. · Answer

All these views and no replies?  Come on, guys!  :)

Sharetha H. · Answer

Thanks, Ryan and Patrick.  I was planning to do my own research, but was looking to narrow things down based on if anyone has heard of a "strong" REIT or already invests in one.  Thank you for your recommendations.

Ryan Arth · Answer

I prefer indexes to individual securities, as I am uncomfortable betting on individual horses that I don't control.

I settled on a REIT index, which is an ETF. The ticker is VNQ, it is a Vanguard that tracks the MSCI US REIT index.

Best of luck.

Melanie McDaniel · Answer

@Trevor Ewen, thanks for the update. I am looking at a long term hold. I will poke around at the REIT ETFs. Thanks!

Trevor Ewen · Answer

@Melanie McDaniel

If your goal is liquidity, then I do not recommend them at the moment. The REIT fund that I own had a 3% drop last week (nearly). As with most long-term investments, I took that opportunity to buy more.

REIT funds or REITs that have structured a conservative and diverse portfolio will be able to weather a recession. Furthermore, you get paid a little to hold onto them in the mean time. Some will definitely fail and I do think that will place downward pressure on the asset class in the next 5 years or so.

Many commercial investors in pricey coastal markets have way overpaid for assets that are now falling in value. It's a lesson you learn on day one of macroeconomics, and it would be wise to heed it again. Aside from over-valued coastal markets, the other lurking specter is the US abundance of undesirable commercial properties in the suburbs and exurbs. Namely: malls.

If you are looking at individual REITs, I would recommend those that focus on stability & pro-growth affordable markets like Texas or Florida. Steer clear of malls, and it's likely that everyone here is better off buying a REIT fund or ETF. If you need liquidity in the next 10 years, you may want to consider a different investment altogether.

Account Closed · Answer

Great advice thank you so much!

Trevor Ewen · Answer

@Sharetha H.

It's about as boring as you can get, but you can't go wrong with a REIT Etf. Depending on your broker, there should be some in the no commission category.

You will get a nice low-fee exposure to many REITs that way.

I will advise that now is (likely) a pretty terrible time to buy, as they have been on a tear (like much of the market). And with Greece news my REIT Etfs have done better than most of the market.

Account Closed · Answer

REITs and ReTFs are the way to go if you want a hassle-free foothold in real estate investing. My background is in real estate investing and REITs specifically, so let me know if you have any questions. I've been at this for 20+ years!

REIT Recommendations?

Most Popular Reply