Is real estate investment trusts a good career path? If you work in the finance field, you’ve probably heard of the growing Real Estate Investment Trust (REIT). It is a growing segment of the US financial industry because it produces income-oriented real estate.
But the real question is, is REITs a good career path?
Since 1960, real estate investment trusts have become a great career choice due to their remarkable growth. Regardless of your original occupation, choosing one will add variety to your portfolio. You will find various job opportunities in this real estate career. Additionally, US REITs are a promising career with a market capitalization of $1.25 trillion.
Did you know that the most remarkable opportunity for REITs is at the level of a managerial position? After all, you can make a big difference in the world of commercial real estate.
To learn more about REITs, read this article to the end. If you are interested in taking real estate courses then this article on the 15 Best Real Estate Classes Online: Free and Paid Courses will provide you with the resources you need.
What is REITs?
Real Estate Investment Trusts are financial vehicles that allow individuals to own a portion of residential or commercial real estate in their diversified portfolio. These are companies that own, manage or finance income-producing real estate.
REITs are funds or securities that invest in real states that generate a lot of income.
It is also important to note that investors invest their money in projects as diverse as hospitals, hotels, warehouses and schools. These mutual funds receive tax breaks from the government and can promise higher returns to investors.
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What types of REITs are there?
Before diving into answering the question, is real estate investment trusts a good career path? Let us, first of all, talk a little about what types of REITs are there. This is in a bid to bring about a more in-depth understanding of this field before choosing to make a career out of it.
Equity funds own properties that they can manage themselves or subcontract to another company. These companies earn income from the rental of properties they own or manage and from sales that generate capital gains. In this type of REITs shareholders usually get 100% of the earnings (or dividends).
Mortgage Real Estate Investment Trusts or mortgage fund buys and manages commercial real estate mortgages. The net income is the difference between the money it pays for the loan and the interest on the money it uses to finance the loan. In such REITs, the shareholders get at least 90 percent of its earning.
Hybrid REITs manage real estate, but channel their financing through debt or preferred stock. This lowers taxes and allows companies to focus on their core business, i.e. generating rental income. Hybrid REITs may also pay dividends, which include dividends from capital gains and income.
What do REITs own?
REITs buy a long-term rental property. Some examples include office buildings, apartments, medical buildings, warehouses, malls, and shopping malls. Most REITs focus on income-producing properties, but some REITs buy properties they hold for long-term capital gains.
REITs can be said to be a hybrid investment than direct real estate ownership because you do not own separate property and are not involved in the day-to-day operations. In contrast, REITs trade in form of stocks, but they own income-producing real estate.
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What types of Jobs are Available in Real State Investment Trusts?
As a vast career path, there are a lot of jobs available in real estate investment trusts – they include Property Manager, Divisional Director, President, COO, Accounts Payable Manager, Accounts Receivable Manager, REIT Analyst, Lease Administrator, Investor Relations Manager, Portfolio Manager, Financial Analyst, Tax Accountant, Real Estate Property Appraiser, Customer Service Representative, Regional Director, etc.
Is Real Estate Investment Trusts a Good Career Path?
So if you ask if real estate investment trusts is a good career path, I would say yes, REIT is a good career choice only if you have a passion for finance and real estate.
As a REIT agent, you can offer investors the opportunity to own and benefit from valuable real estate. In addition, you can give amateur investors access to all kinds of dividend income. This way, as an agent, you have the opportunity to help the community grow.
The listed company you work for offers you plenty of career development opportunities. In return, you increase your potential talent and expand your recruiting opportunities.
Several universities in the United States offer courses related to the REIT industry. You can earn a degree from these universities and find job opportunities in real estate. Some of these courses and programs include Property accounting, Design of commercial buildings, Property management, etc.
These courses can help you enter the industry without any problems. However, you need real estate experience in addition to internships. Therefore, you can even complete a bachelor’s degree in the following fields, Finance, Real Estate, Accounting and Statistics
Why working with REITs is a Good Career
Real estate investing is a career path that will allow you to become your own boss, therefore, it is a great career path. It’s up to you if you want to build something. You can choose an area of interest and then showcase all of your skills so people can see your progress as a real estate investor.
What are the Most Common Property Types in a Real Estate Investment Trust Portfolio?
Some of the common property types in a real estate investment trust portfolio are Shopping centres, Apartment buildings, Office buildings, Commercial properties, Multi-family buildings, Residential properties, Commercial real estate, Single-family homes for rent, Shopping malls, Self-storage buildings, health care properties, Data centres, etc.
What to Expect From a Real Estate Investment Trusts Career Path?
The Essential Roadmap for a REIT Career takes you on your financial journey. Also, this path will take you to the headquarters.
When you become a certified agent in this field, you are responsible for monitoring operations and acquiring properties based on value. You can even choose other entry-level jobs in this field.
If you work for a company that works for independent brokers, you represent their properties and screen potential tenants. So you can expect jobs as a property manager and customer representative and leasing agent.
In the US, certification is a great way to get into the REIT business. You must have a license to sell real estate as a company or broker. Certified Commercial Investment Member is a certification requirement needed whether you are working as an individual or a company. This certification is accredited by the CCIM Institute.
Can Investing in REITs Make You Rich?
The answer is yes, but bear in mind that it is possible to lose money also. You cannot guarantee investment to be 100% sure. The bright spot of REITs is that you don’t have to invest large sums of money to buy the company’s shares. Instead, you start with small investments that you can increase until you reach the desired amount that you want to invest.
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Advantages and Disadvantages of Real Estate Investment Trusts
Here we look at the advantages and disadvantages of operating and investing and going for a career path in real estate investment trusts.
Advantages of REITs
The following are the unique advantages of a real estate investment trusts:
Property exposure without purchasing property
Without the right experience, it can be difficult for people to diversify their real estate portfolio. This can be very problematic because all your eggs are in one basket and no matter how educated you are, you are always at risk of overpaying or finding an undervalued property.
In real estate investment trusts you are allowed to invest in real estate that you could never afford on your own.
High yield without property management problems
Most people who invest in REITs do so for the high returns, not for the dividends. However, since these companies employ external management companies, most of their earnings are invested back into the companies to expand their portfolios. This can be very profitable as most of your dividends will be income on top of your current income.
You can buy fractional shares of REIT shares
Most REITs are large companies worth billions of dollars. So even if you have $100, it may not be enough to get the full value of the stock. Fortunately, most real estate investment trusts allow you to buy fractional unit shares, which can be a great investment option for small and first-time investors.
Diversification in property types and regions
Because these companies own multiple properties in different locations, they are highly diversified. They never lose significant value unless there is an economic crisis that affects all properties.
Diverse forms of property types
Real estate investment trusts give individuals the opportunity to diversify their investment portfolio through different types of real estate. For example, instead of buying a single property, you can buy multiple REITs focusing on commercial, residential and development properties.
This will make your portfolio more stable because you own several different types of properties from the same company.
Disadvantages of a Career in Real Estate Investment Trusts
These are the unique disadvantages of investing and taking a career path in real estate investment trusts.
They are highly speculative
Since most REITs don’t take title to their properties (most use mortgages), they can’t sell the property if they need cash. So they rely on debt to finance growth and pay dividends to investors.
If a REIT’s assets are worth more than its debt, that’s not necessarily a bad thing. However, if part of the company’s assets deteriorates, the company may be on the verge of bankruptcy.
Due to the high debt interest, it is susceptible to changes in the interest rate.
As you probably know from the lessons of history, interest rates have been falling steadily since the 1980s. That might be bad for banks and loans, but good for REITs because their yields grow at a lower cost. When interest rates change direction and start to rise, the opposite happens, weakening their results.
They operate at a net loss
We have mentioned that real estate investment trusts use debt to finance growth, but doing so is expensive. In general, REITs have a lot of debt (in addition to high-interest rates).
Less transparent than traditional companies
As we all know that real estate investment trusts do not possess their own assets, everything they own is mortgaged. That’s why you won’t find information about properties owned by these companies. Instead, you only see their gross income, expenses made due to operations, and net income.
This lack of transparency can be very off-putting to individual investors because they cannot know exactly what assets these companies own and what they are worth.
A career path in real estate investment trusts can be very rewarding, as we have seen over the years how real estate investment has produced many millionaires. However, this field of endeavours will not favour everyone.
We have discussed some important points in this article that will be of help to anyone who wants to venture into this career path in different capacities.
All you need is to make use of the information and decide if this is a career you will want to pursue whether as an individual working for a real estate investment trusts company or becoming an investor yourself.
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