What Tha Finance or WTF?!: REITs
It’s been a deep pause since the last What Tha Finance article within the series, but I’m back with another based upon this recent article. While this fund isn’t public it gives good grounds to a particular fund that many heard the name, yet don’t know the game around them! Let’s get into another WTF!
One of my favorite types of stocks are REITs. As the flow of this theme of this article series goes - WTF are those!? REITs or Real Estate Investment Trusts are companies that own and most times operate income-producing real estate. They can range from the hospital you go into or the mall you shop in. Heck, for some - where you work. They are more common than you think. Why you think those “Spirit of Halloween” situations pop up, they gotta get some coins coming in! Tuh!
A lot of people move to invest in REITs due to the fact that they want to own Real Estate without holding a hammer (I mean, you can own both). But these types of funds have to meet a number of requirements to qualify as REITs. And a good bit of them are on the stock exchange!
Found this dope fact: Roughly 145 Million Americans have invested within REITs through their 401(k), IRAs, pension plans, and other investment funds. Whew! (www.reit.com)
REITs must pay out at least 90% of their taxable income to shareholders/investors —and a good bit of them pay out 100%. Keep in mind about the income taxes on those dividends - just as with any sort of investment.
Here are some sectors that REITs fall into:
Office REITs - Skyscrapers, office parks, etc
Industrial REITs - Industrial facilities, warehouses and distribution centers, etc
Retail REITs - Malls, outlets, big box centers, etc
Lodging REITs - Hotels and resorts, business centers, etc
Residential REITs - Apartment buildings, student housing, manufactured homes and single-family homes, etc.
Timberland REITs (not the boot) - Harvesting and selling timber
Health Care REITs - Senior living facilities, hospitals, medical office buildings and skilled nursing facilities, etc
Self-Storage REITs - Storage facilities
Infrastructure REITs - Fiber cables, wireless infrastructure, telecommunications towers and energy pipelines, etc.
Data center REITs - range of products and services to help keep servers and data safe, including providing uninterruptible power supplies, air-cooled chillers and physical security.
Diversified REITs - Office and industrial properties (think of spaces that offer a combination of things), etc.
Specialty REITs - Movie theaters, casinos, farmland and outdoor advertising sites.etc
Mortgage REITs (mREITS) - Provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities (MBS) and earning income from the interest on those investments.
It’s a lot of them, huh? Yes!
Some things to keep in mind about them is to of course do your research on them before reaching for them. Look into those industries to understand the long term scale of it.
One platform that I am looking into is Fundrise. I started it recently and like what I see so far. Still moving through it. Yet, you can still purchase REITs through your portfolio. I have a good bit of REITs within all of my portfolios (yes, I have more than one).
When I stayed in an apartment complex, I grabbed the REIT for it. No lie. Petty. Hell, Consume What you Consume.
Some of my favorite REITs - Simon Property Group Inc. (SPG), Apple Hospitality REIT (APLE), MGM Growth Properties LLC (MGP), CubeSmart (CUBE), Realty Income Corp (O).
My Paper Perspective: They are a good way to diversify your portfolio. After unlocking your financial objectives, you know. But, they pay strong dividends and allow you to get in on an industry that isn’t going anywhere. I plan on loading up on a few others beyond the ones I listed through the reminder of the year!