REITs for Property Exposure

I Know Myself

I am not a real estate expert.  I know enough that I do not care to learn about that subject.  I am an engineer.  I love technology, astronomy, and many other subjects.  I’m currently reading about human evolution in the a book called, The Social Ape.  I just don’t have the time nor inclination to deal with the rigors of fixing someone else’s house.  That is to say, while I enjoy repairing the property that I live in as and when maintenance comes up, I do not have the patience for any other properties that I would consider as an investment.

There are several reasons why I do not have a lot of interest in owning physical real estate aside from my home.  The primary is the process of dealing with tenants.  Again, I am an engineer, and I like things more than people.  This is not to say that I am an introvert, but I do prefer do have such interactions on my own terms.  Most of the people that I know that own real estate do have issues with their tenants, or have with some at one time or another.  It could be a NY thing, or the suburban to urban area that I live in.  The fact remains, that I do not have the comfort to invest this way directly.

Property Investing

Over the last year as I started to spend a significantly larger amount of time on FIRE, I have been dancing around crowd funding property.  Reality Shares was the one I had chosen, and was looking for the right investment for me when it folded up.  In spite of that experience, which cost me nothing but a little time, I did learn some other things.  You are buying into a property.  I do not know every market.  There are vast differences between one side of town and another.  There are market trends to follow and to watch to ensure that those putting up the investment are not foolish.

For instance, in the city of Norwalk, Connecticut, they are building a large mall right near I-95.  This could sound like a wise investment, but there are two other malls not far away in Stamford and Danbury that are not exactly doing well.  Why would a third be a good investment?  Now living as I do in the suburbs of NY, and traveling as much as I do among the 3 states that are all within 60 miles of NYC to visit friends and family, I am exposed to these things in this area.  I would know not to buy into a mall in Norwalk, but I could not be so wise about a mall in say a part of those three states not close to NYC.  What do I know about San Antonio Texas, other than the fact that I once spent a month at the Air Force base there when I served?  The answer is zilch, nada, nothing, zip.

How I View REITs

I have seen that many folks have made wise and thoughtful investments in real estate directly or indirectly through crowd funding sites.  Their success is wonderful. I do not think they are foolish, but neither do I think my hesitance is foolish either.  Were I inclined to spend more time investigating these opportunities, I would likely buy into either type of property as I think they are the more lucrative option over REITs in much the same way that I see individual stocks over mutual funds or ETFs.  At this point in my life, and this will likely change as all things do, only REITs seem to make sense to me.

The logic to me behind REITs is that they buy multiple properties and spread the risk over them.  I like that.  They do take a good chunk of the money off of the top, but they are generally setup to give you the stock holder the majority of the funds in terms of dividends. This risk and reward reduction addresses the concerns of mine that I posted about above.

I’ve been into REITs for a While

Several years ago, I started looking to diversify my investments a bit.  I put a chunk of funds into a few high dividend yield stocks, and I found a few REITs in the process.  I stumbled across them, but they have treated me well.  There will be a future post on this, and perhaps a running chart or something to that effect. I am still thinking through those ideas.  The fact remains though that I do like them, and have invested in them for several years.

I was going to post about the two articles that triggered this post in this post, but I have changed my mind.  I think I will end this one here, and save them for that feature that I have in mind.  I am building up my REIT portfolio, and at least one, if not both of those two new REITs will be in my portfolio shortly. One thing I haven’t done is to share my actual numbers on this site.  For some things, like this, I will.

A Possible New Direction

As always, we are still putting a extra few hundred a month into our mortgage payments. I am still putting a few hundred a month into a index fund.  I may redirect that into REITs as well, now that I think about it.  We have a lot in stocks as it is.  With the recent decision to pay down a huge chunk of our mortgage with mostly cash, now seems like a good idea to do a larger what is our balance of funds.  It’s been a while, and I think it’s time.

As always I am curious about your thoughts on this.  Do you like REITs?  How often do you do a careful review of your assets and allocations?

 

Advertisements

2 Comments

    1. The one that I have a large position in invests in NYC real estate. I live in NYC for 10 years, and have lived in the region my whole life. I feel comfortable with a REIT around here. I have a smaller speculative investment in an international REIT, but it’s a relatively small amount of money. I have decided to put some more cash in some others.

      Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s