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Investing in REITS

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Investing in REITS

Real Estate Investment Trusts

Bloomberg Press,

15 min read
10 take-aways
Audio & text

What's inside?

How to get into the real-estate game safely by buying stock in real-estate investment trusts (REITs).

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Editorial Rating

8

Qualities

  • Applicable

Recommendation

More and more financial advisers suggest investing in REITs. But are they another real-estate investment fad, like the "real estate limited partnerships" of the 1980s? Not at all, says Ralph L. Block, an experienced REIT portfolio manager and former securities attorney. In this clear, sensible book, Block provides an engaging overview of REITs and the underlying real-estate market in which they invest. Block's self-deprecating, casual style is refreshing, and the book assumes little background knowledge of finance, economics or real estate (though it does bog down occasionally in accounting minutiae). In addition to learning about REITs, you'll also get a painless refresher on investment basics at no extra cost. getAbstract recommends this book to prudent, buy-and-hold investors who want to know if REITs are right for them.

Summary

The Appeal of REITs

Looking for an investment that offers low risk, low volatility and high returns, and that provides a hedge against stock market downturns? Consider REITs, "real-estate investment trusts." While you may not have heard of REITs (rhymes with "beets"), they've been around since the 1960s. Now all sorts of investors, from individuals to institutions, are discovering them, and it's not hard to see their appeal. According to the National Association of Real-Estate Investment Trusts, a REIT trade association, over the long term REITs have average total returns of about 12%, comparable to the Standard & Poors 500 index. Even better, REIT performance doesn't correlate highly with the rest of the stock market. In other words, when the stock market starts to sink, REITs stay afloat. And, the REIT industry has room to grow. The commercial real-estate market is worth about $4 trillion, yet REITs own or manage only about 10% of it. Given these attributes, it's no wonder investors have entrusted some $300 billion to REITs, about the same amount they have invested in shares of Microsoft.

The REIT Stuff

So what is a REIT, exactly? The most popular REITs...

About the Author

Ralph L. Block is a senior portfolio manager who has worked with REIT funds for several financial corporations. He was a business lawyer for 25 years.

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