Real estate is a broad sector therefore it offers many career paths. There were times when people thought that a real estate agent is the only career path available but things have changed and now many people are investing in real estate and making a great living too. So, is real estate investment trusts (REITs) a good career path?
Yes, REITs is a good career path. If you have an interest in real estate investing but you don’t want to own it yourself and take the high pressure then a career in REITs can be a good choice for you. You will have quite a few options to choose from like become a developer or manage the property. You can also become an asset manager or investor relations officer and have a solid career.
What Are Real Estate Investment Trusts?
Real estate investment trusts are companies’ funds or securities that allow people to hold an
A real estate investment trust (REITs) is a company that owns, operates, and finances an income-producing real estate business (Some REITs engage in financing real estate).
In a REIT, you can invest in a portion of a real estate project and generate profit. Most REITs are related to commercial properties like hospitals, apartments, shopping malls, etc. The best part of REITs is, you can earn dividends from real estate investments without having to buy, manage, or finance any properties by yourself.
A real estate investment trust (REIT) is a type of investment fund that is formed with many other investors. Usually, a REIT owns and operates income-producing real estate.
Real estate investment trusts are instruments that allow a person to hold a portion of residential or commercial leases in their diversified portfolios. These are companies that own, operate or finance income-generating real estate.
The company allows people to invest in property. They usually have in their possession many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping centres, hotels and commercial forests.
In real estate investment trusts, the investors put their money into diverse projects such as hospitals, schools, warehouses, and hotels and the investment trusts companies receive tax concessions from the government, promising a better return for their investments.
What Qualifies As A REIT?
If a company wants to qualify as a REIT then it must comply with certain provisions in the Internal Revenue Code (IRC).
There are some requirements the company has to fulfill like a certain amount of primary income-generating real estate and what percentage of the income is distributed to shareholders.
Below are some requirements that a company must meet to qualify as a REIT:
- Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries
- Derive at least 75% of gross income from rents, interest on mortgages, or real estate sales
- Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
- Be an entity that’s taxable as a corporation
- Be managed by a board of directors or trustees
- Have at least 100 shareholders after its first year of existence
- Have no more than 50% of its shares held by five or fewer individuals
Is Real Estate Investment Trusts A Good Career Path?
The modest answer is “yes.” Real estate investment trust is a good career path because you can choose the area you’re interested in; it’s up to you to figure out your preferred job position that will suit your needs best. You may want one that provides you the golden privilege to be flexible with your work schedule, maybe using weekend hours for example.
Do REITs pay monthly dividends?
Residential and diversified real estate investments do pay monthly dividends. The monthly income comes from mortgage and rent. REITs are reported to have an average return of 10.5 percent, just like traditional rental (landlord-tenant) real estate investment systems.
Meanwhile, managers of real estate investment trusts (REITs) know that their investment trust funds exceed the assumed 10.5 percent average yearly return. REITs are speculative and rely on high-yield debt financing to make better-than-average returns on real estate properties and developments.
So do they pay investors monthly dividends? Yes, they surely do so while collecting a small management fee. Some HNWIs make a decent amount of passive income from REITs, but the harsh reality is that you will probably need at least $100,000 to earn $1,000 a month as a retail investor.
Real estate investment is said to have “produced a number of millionaires” for decades. it is a relatively lower-risk asset class compared to stocks and crypto. However, real estate is not for everyone.
Some people just add REITs to their portfolio just to diversify the high risk of drawdown associated with capital market investments such as stocks, collectibles, crypto, and CFDs.
You can pursue the career of becoming a real estate investor and still work with a REIT firm. That way, you earn while you learn and gather more experience to become the next Warren Buffett or Donald Trump.