Urban Investor's Dictionary: REITs
Back in the 60s, Congress created REITs: Real Estate Investment Trusts—so that the —average American could reap the benefits of income earning property.
REITs allow individuals to invest in large scale income producing real estate, without the hassle and overhead of going out, buying, and managing property.
REITs offer investors multiple benefits: Diversification, Dividends, Liquidity, and Transparency.
While operating under the same rules and regulations as other public companies REITs have, over the long term outperformed the S&P 500, Dow Jones Industrials and NASDAQ Composite, while also showing little correlation to the performance of the broader market.
There are two kinds of REITs:
Equity REITs derive their income from rent on real properties, usually things like malls, industrial facilities, apartment complexes, hotels, hospitals, and more.
Mortgage REITs derive their income from interest earned on mortgages or mortgage securities.
There's some criteria a REIT must meet to qualify—modeled after mutual funds, and recognized as a corporation, it must have a minimum of 100 shareholders, be managed by a board of directors or trustees, invest 75% of its total assets in real estate, and derive at least 75% of its gross income from rents on real property, interest on mortgages financing real property or from sales of real estate.
Should I buy REITs?
I did some research, asked my investing mentor, and checked the performance of my own REITs. I'll let you decide for yourself.
Here's a take from my investing mentor (who opts to remain anonymous).
To start I wanted a REIT in my portfolio some years back to diversify. This was maybe 6 years ago when REITs were booming which they did through '16. My broker recommended Cole, a nontraded REIT. Cole held stand alone commercial real estate occupied by national chains like Walgreens. Their occupancy rate was high and the renter assumed most or all of the maintenance. It was golden. I received a 6.5 % dividend till it went public and I made a healthy gain on its sale. I immediately ploughed all my earnings into another Cole REIT. This time there were problems. Cole allowed themselves to be acquired by American Realty which immediately had a compensation scandal.
Cole product sales dwindled immediately nationally as broker confidence in them diminished. Then it looked like Cole was going to be taken over by Apollo Global, a private equity firm at a fraction of their worth. That's when I decided to bail. It was hard getting a redemption from Cole too. They were resistant. There was a minimal redemption penalty as I had held the REIT for some time. The ample dividend it paid more than compensated. With both REITs I walked away with a 50% profit over approximately 4 years. It was a frightening experience. Nontraded REITs are hard to redeem quickly.
Finally, I now hold a tradable REIT fund through my NY Life variable annuity but it's only a small fraction of my portfolio. It's been down as much as 9%. It is rated high risk.
Projections for REITs have been mixed. Some segments have been slated to do well like commercial office space due to the uptick in the economy, and Internet sales storage facilities for companies like Amazon. But I just read an article claiming commercial property overall is now overpriced, and the 7 year REIT rally is ending. Investors have not embraced REITs since they got a separate S&P sector listing. REITs pay around a 4% dividend and are seen as a haven for investors when they are risk averse. This is not the case now, which is why REITs are down.
In an article for Forbes, Brett Owens claims REITs are the sector to take off for 2017. He took pains to bust a common REIT myth that they fall as interest rates rise, and even provides data that proves that REITs actually perform better as rates rise. He also suggest 5 REITs to buy, 3 of which I own personally—Public Storage (PSA), Simon Property Group Inc., (SPG), and Ventas Inc., (VTR).
My own REIT portfolio has yielded 13.2% to date.
REITs are a great way to diversify your portfolio, but do your due diligence before deciding to pull the trigger for yourself!
Check out this resource for more!
Every time payday rolls around, I’m on top of the world. Jeff Bezos-level rich - even though I’m anything but. And then somehow the very next day, rent is due.
The cycle continues. The next payday, bills for my apartment. I find myself without a surplus of savings since I just moved and newly-furnished my apartment completely.
Even more terrifying is the looming presence of the holiday season. Halloween’s officially over and before we know it, hello Thanksgiving…and then there’s Hanukkah, Christmas, New Year’s. It’s insane.
I’ve been feeling very British lately. Not in a Union-Jack-obsessed, “Keep Calm and Carry-On” way. I went through that phase in 2012 with everyone else… no thank you. And it’s not even a surge of patriotism catalyzed by the Queen dying — I’m firmly team Diana and team Meghan.
Now that fall is officially here, the holidays will sweep in and I’ll have to contend with the fact that I won’t be spending them with my family in the UK. I went home to London earlier this year, so there’s not much left in my travel budget for another trip across the pond. A few domestic jaunts might be in my future, but the closest I’ll get to England this winter is watching Love Island and Love, Actually.
So in that spirit, I’ve been filling my days with content from my favorite Brits. I’m listening to all the old British rock bands I grew up listening to, patiently awaiting the new Arctic Monkeys album, and rewatching anything with Michaela Coel in it. I even shipped myself an order of British Baked Beans, so you know it’s dire.
I’ve also been watching British YouTubers like Grace Beverley — my favorite. Generally, I only go on YouTube to watch Vogue Beauty Secrets and AD Open Door videos. But I’m so glad I stumbled on Grace. Her content is a mix of London lifestyle (what lured me in), relatable entrepreneurship, and mindful productivity. I’m not a hustle-and-grind-girlboss, but as a creative person in a 9-to-5, I need all the help I can get to stay plugged in. So, the video “how to be really really really productive without getting overwhelmed” changed my approach to WFH.
Grace outlines her own productivity method: the to-do table. Instead of making a simple to-do list, she divides her tasks into a table that anyone can follow. As someone who’s survived with to-do lists for years, I recently implemented Grace’s method, and it’s revolutionized my workdays.
how to be really really really productive without getting overwhelmedwww.youtube.com
I follow her routine to a tee. Here’s how it works:
Essentially, she divides her daily responsibilities into four categories: quick ticks, tasks, projects, and non-negotiables.
- Quick Ticks: Actions that take less than 5-minutes
- Tasks: To-do’s that take up to 30-minutes. Probably don’t take too much brain energy.
- Projects: Long-term list items. These help guide your priorities, even if you’re not crossing them off in one day.
- Non-negotiables: Pick 3 things each day that you must get done. This is how you’ll truly measure success.
With everything written down and sorted, next address your schedule. Meetings, deadlines, and time blocks — whatever works best for you. Write it down. Then make a pact with yourself to stick to them.
This way of categorization provides a roadmap for prioritizing your day — making you far more productive. Have you ever spent the entire day on small tasks and then suddenly realized you hadn’t moved the needle on any task? Or do you spend way too much time on tasks that aren’t a priority? No more. With your non-negotiables laid out, you know what to laser-focus on and what to dedicate energy towards.
Also, it pays to know your working style. I’m not a morning person. Yet, I have to be up and at ‘em super early. So, first thing in the morning, I march through my Quick Ticks to warm me up. I set a time limit, so I can knock out some easy wins which is totally inspiring. Then I move on to bigger things without lingering on emails or admin. For others, it might be more helpful to tackle the big things with all that early-in-the-day brain power earlier.
Grace has great tips on avoiding overwhelm and burnout. My favorite is taking more intentional breaks rather than scrolling through social media. I call this scrolling “productive” because I’m “coming up with pitches.” Oh, the lies we tell ourselves. It’s more productive in the long run to giving my brain a break with non-screen related stimuli.
Grace’s solution? Set a timer to read a real, an actual book. I’ve never thought of this. It’s a genius way to check off some books on my TBR and kickstart my creativity. After reading a good book, I’m completely inspired to write. So having books near my desk helps me step away from the computer during my lunch break for an actual reset. (And yes, the current books I’m reading are by British authors: Assembly by Natasha Brown, and Love in Color: Mythical Tales from Around the World, Retold by Bolu Babalolu.)
In my pursuit of switching out my WFH set-up and getting my life together, I’ve engineered my workstation for success. With my new WFH essentials and Grace’s productivity technique, I’m revitalized for work — despite the fall blues and my melancholy about the pending holidays.
Here are the things getting me hyped for work and helping me crush my Grace Beverley-inspired to-do tables — no lists in sight:
Pack your bags — Southwest Airlines is having a major sale! Fares are as low as $59 one-way if you book by October 3rd.
This end-of-summer super sale is a game-changer for your travel plans through the end of the year. Summertime travel gets all the glory. But why not take advantage of your long weekends, holidays, and PTO this fall. You’ll be surprised at how much travel you can fit in. Keep the fall/winter season exciting with domestic trips that give you all the excitement without breaking the bank. All thanks to Southwest.
Here’s the breakdown:
Where can you go?
You’ll find discounted tickets to and from most airports. Sale fares apply to cross country travel, and even Hawaii, Mexico, and the Caribbean! Whether you’re visiting a new city or revisiting your last beach vacation, this sale has fares to make your travel dreams come true.
What do the fares cover?
Southwest Airlines has multiple fare tiers, each with various benefits. Wanna Get Away fares start at $59, while Wanna Get Away Plus fares start at $89. You can also find great deals on Anytime fares, which offer priority boarding and express lanes. Then there’s Business Select tickets for a luxe experience at an affordable price point.
Do you have to be a Southwest Rapid Rewards member?
You may think these sale fares are too good to be true. Is there a catch? Do you have to be a Southwest Rapid Rewards member to access them? You’re in luck — anyone can attain these fares for a limited time.
But, insider tip, you should consider signing up for Southwest Rapid Rewards. With a free sign up, you earn points and miles with each trip you take. And with this sale, each dollar you spend on these discounted tix can stretch super far until you eventually earn free travel. The only thing better than a sale is free stuff.
I’ve been browsing the Southwest Airlines site, checking out flights and dreaming.