Keller Williams Valley Realty
Danielle Russodivito, Keller Williams Valley RealtyPhone: (845) 664-2144
Email: [email protected]

Real Estate Investment Trusts: How to Start

by Danielle Russodivito 09/06/2020

Photo by Nattanan Kanchanaprat via Pixabay

Would you like to invest in real estate? To buy thousands of income-producing properties, from apartments to office buildings to industrial parks, all over the country or the world? It you’re wealthy, you might dispatch someone to travel far and wide and do just that, but even if you’re not rich you can participate. The tool that enables this is a Real Estate Investment Trust, or REIT.

What is a REIT?

A REIT uses its investors’ money to buy or finance real estate that produces income. It’s an investment in property rather than stocks or bonds. The profit it earns from leases and rents is distributed to investors. By law REITs must pay out 90 percent of this income to the shareholders, but 100 percent is more common.

Most REITS are Equity REITs, which directly own property. Mortgage REITs are indirect, investing in mortgages and mortgage-backed securities. Most REITs are publicly traded and listed on national exchanges. Some are private; these generally require a larger minimum investment.

REIT holdings include residential buildings, office space, industrial facilities, shopping centers, hotels, storage facilities and even data centers. A REIT may invest in one of these asset types or a mix of many.

There are also mutual funds that invest in REITs. Some are actively managed and others are Exchange Traded Funds (ETFs) that buy all REITs, or all REITs in specific categories, without trying to pick winners.

Are REITs a good investment?

REITs offer the benefits of owning rental property without the headaches, homework and personal risk. If you want to buy, say, an apartment building, you must evaluate the property, arrange financing, find renters, deal with tenants and building maintenance on a day-to-day basis and handle the accounting and taxes. If your investment turns sour you’re in for a big loss. With REITs, professionals do that work, and if one property loses money it’s offset by those that do well. Also, you can put as much or as little at risk as you want in a REIT. You can buy a small number of shares for a few thousand or even a few hundred dollars.

Historically, REITs have outperformed most other investments long-term. Average returns for the last 10, 20, 30 and 40 years have been comfortably over 10%. However, REITs are subject to the ups and downs of real estate and can be a loser in the short run. Generally the best time to buy a REIT is when the real estate market is at the bottom as opposed to when it’s nearing a crest. Of course, it’s difficult to know exactly when that is, so dollar cost averaging, i.e., buying regularly over time, is a good strategy.

REITs tend not to move up and down in lockstep with stocks and bonds, so they can have a balancing effect in a portfolio. Few would recommend making REITs the major part of your holdings, but they can be an important component of your investment strategy.

About the Author
Author

Danielle Russodivito

I found my passion in real estate in 2011 when I purchased my first condo in Suffern, NY. I loved looking at properties online, in person, and on TV. I was also very into the interior design aspect of the career as well. 

I loved the whole idea of helping others reach the next step in their lives. For two years after I purchased my condo, I saved my money and worked full-time at my father's restaurant, Marcello's, until I had enough to go full force into real estate. I received my license in New York and New Jersey, which is very convenient since the border is 5 minutes away.

Before real estate, I worked in various customer service positions, as well as my father's restaurant since 2004. I eventually sold my condo in 2013, and purchased a house. In total, I have personally been through two purchases, and two sales. I am now a broker associate/salesperson in NY & NJ. 

Experience

I have experience with listings, buyers, short sales, foreclosures, investors, commercial, rentals, relocation, USA, multi-family, buy and hold and flips.  

Licensed in New York and New Jersey since June 2013.

Achievements

2014 Rookie of the Year for Rand Realty

2014 Rookie of the Year for Better Homes & Gardens Real Estate (USA & Canada)  

Sales

2014: 17 Units — Gross Sales $6,665,500 Silver Award, Rookie of the 

2015: 8 Units — Gross Sales $3,529,150 Silver Award 

2016: 25 Units — Gross Sales $4,593,000 Silver Award

2017: 47 Units — Gross Sales $12,211,280 Platinum Award 

2018: 24 Units — Gross Sales $3,589,720 Silver Award  

2019: 24 Units — Gross Sales $4,075,550 (New Company without Awards) 

Certifications

2014 C.O.R.E Transnational Management 

2017 Certified Home Stager 

2017+ USAA Certified 

2017+ Relocation Certified  

Member of:

Hudson Gateway MLS - New Jersey MLS - Real Source - Garden State MLS Hudson County MLS - National Association of Realtors (NY/NJ) 

https://www.youtube.com/watch?v=1_GS8EG5YVw