Is Real Estate Investment Trusts A Good Career Path? Understanding Real Estate Investment Trusts (REITS)

by Author
Is Real Estate Investment Trusts a good career path

Making a career choice is one of the most daunting decisions in our lives. We have the pressure to choose between something great and exceptionally great. We worry and spend an endless amount of joules of human energies trying to think this out.

When it comes to real estate investment, (REIT) spontaneously comes to people’s minds. REIT gives you the chance to own several small shares of a multiform real estate portfolio.

Real estate investment is one profitable process. Owning real estate assets does not only happen through buying real estate properties.

In the retail field, even health care property investments can earn you money. REIT gives you the chance to invest in several real estate properties. So let’s begin with,

Is Real Estate Investment Trust a good career path?

Yes, it is a good career because it has many available jobs. It’s upon you to figure out which position you wish to hold. Choose a job that offers you flexibility.

However, you have to stay focused and gather more knowledge about the market to be successful. The other good thing is that REIT jobs are among the best-paying jobs in the market.

What Is Real Estate Investment Trust?

It’s an investment fund that invests in various income-generating real estate assets. Investors pool together their funds and support them in trust with the hope of getting income or profits.

REITs source funds to buy or build assets that they sell or rent to get profits. The profits or income generated is shared between the investors at the end of a fiscal year.

Some of the assets controlled by REITs are hotels, office buildings, resorts, warehouses, hospitals, apartments, and shopping malls. The REITs receive special tax considerations from the government, ensuring they get profits for their investors.

Some of the most prominent publicly traded REITs in the United States are Crown Castle, American Tower, Prologis, Simon property, Equinix, Public Storage, Equity Residential, Digital Realty Avalon Bay Communities.

Advantages Of REITS

You need to understand the benefits or REITs to get your answer to “is real estate investment trust a good career.” REITs are exempted from income and corporation tax. Other than exemption from double taxation, REITs also have several other benefits. They include:

1. Access to investment and capital access

It gives individuals and groups the chance to mobilize funds and invest in the real estate sector. It also offers the middle income the opportunity to have ownership in the growing real estate sector. They invest in a manner that is less capital intensive compared to individual ownership of property.

2. Liquidity

The shares of REIT are highly liquid. One can easily buy and sell the shares. Also, unlike other investments, the properties held by REITs have highly liquid. They can be quickly sold to settle any financial issues.

3. Professional management

REITs properties are managed by professionals such as funds managers and property managers. These individuals understand the business and the industry quite well. They always have a keen eye on any opportunities that arise, thus bringing huge profits to the investors.

4. Transparency

Most REITs are listed in the stock market and do trade publicly. This makes them transparent. Besides, they are expected to give financial reports to investors occasionally. The timely information informs investors about the business developments and material risks.

5. Diversification

The REITs have the freedom of investing in various real estates like hospitals, shopping malls, industrial and residential projects, etc.

Diversification ensures the safety of investors’ funds and delivers continuous cash flow. Most of their investments do guarantees heavy returns. Investors get up to almost 90% better return from one investment.

6. Simple tax treatment

REITs are not taxed like other partnerships, and their tax matters are so straightforward. The government is so lenient on the taxation of REITs. This enables REITs to get good profits.

The taxes that were to be paid are allocated to capital gains. In return, the investors get great dividends at the end of a fiscal year.

Disadvantages Of REITs

Any investment that has pros also has its cons. REITs, just like other ventures, do have their shortcomings. They include:

The decrease in rental income is always a severe setback. Since most of the REITs’ revenue comes from renting properties, the reduction of rental income can be caused by immature termination of lease contracts by tenants.

Or tenants’ failure to renew their lease contracts or the inability to get new tenants/replacements a good time.

Real estate success is greatly dependent on the political situation of the country.  A sound government will ensure the growth of the economy.

When the country experiences terrible economic and political crises, the value of the properties might reduce steadily. Elections might cause a political problem.

For close-end REITs, investors do not have the freedom to access their investment before the end of the investment time. Therefore investors cannot redeem their portfolio before the expiry of the investment period.

Types Of REITs

Just like any other field, REIT has its different niches, specializations, and subcategories. There are three different types of REIT, i.e., asset, equity, and mortgage.

1. Equity REIT

It’s the simplest and most traditional type in the real estate company. It involves acquiring physical property. A third party is hired to manage the properties.

With time more properties are added to the portfolio. Inequity, the primary source of income is rental income.

The rental income is collected and then divided among its investors according to shares. There are several career opportunities in equity REIT. One can specialize in finances and get a job as a manager of the investment portfolio.

2. Mortgage REIT

It’s an alternative to equity but functions quite differently. It invests in mortgage properties. Unlike equity, mortgage REIT does not own physical properties or assets.

Its income is generated through interests. Mortgage REIT has several job opportunities in the field of finance, portfolio, analysis, and more.

3. Asset REIT

It has some notable similarities to equity. It holds several asset classes such as Residential REITs: apartments, buildings, and single-family rental properties. Office REITs: it specializes in certain types of office assets—Industrial REITs: own warehouses, factories, and distribution centers, etc.

The types of assets depend on the investment company and their analysis. Asset REIT is an excellent investment for those who want to diversify their investments.

Jobs in Real Estate Investment Trust

Real estate has several jobs. The jobs are among the best-paying jobs in the job market. Below are some of the names of the best-paying jobs in real estate investment.

1. Property management

It’s the most attractive job in the real estate sector. They manage and operate individual properties. They do offer customer service, and they know the advantages of excellent services to their businesses.

It is one of the highest-paying jobs in the real estate field. If you wish to be part of the real estate sector without investments, this is the best job for you. A property manager earns around $60,000 to $80,000 per year.

2. Asset management

Asset managers are responsible for the management of assets for other people.  Generally, there is a role of president and senior vice president of asset management.

The asset managers have to ensure the assets appreciate over time while mitigating risk.

They determine what investments to make, avoid that will help the clients’ portfolio to grow. Asset managers are trained to use various micro and macro analytical tools in managing a client’s portfolio.

To become a vice president asset manager, you will likely need to possess an undergraduate degree with some experience. Asset management can earn you up to $250,000 per year.

3. Development

It’s one of the most critical jobs in the real estate investment trust. The development team is commissioned to build a project. The job revolves around fieldwork.

The development team works with contractors, subcontractors to build the entire project. They also ensure that the property development process is well-financed.

4. Acquisition

it sources new investment opportunities for the investors. The job requires one to have some particular set of skills, such as a financial analyst.

Knowledge about the capital market, finance, and marketing can be a boost to your job profile. The beginner analyst salaries are around $80,000

5. Investor relations

This team manages all the external communications with the REIT shareholders. They plan annual meetings and the meeting documents, which are the proxy statements and the annual report.

This role does require an undergraduate degree with a background in finance and accounts. The salary of a middle investor relation may range from $150,000.

Conclusion

Schools and universities can teach you about real estate investments. To be different and excellent in your real estate career, you should learn to self-explore the real estate sector.  Make it a habit of learning one to two things about real estate.

Additionally, you should possess outstanding qualifications related to the field, such as an undergraduate degree. The knowledge gained from school and the area will help you solidify your REIT career and earn you good money.

Related Posts

Leave a Comment