The Dangers of REIT Investing: 3 MUST KNOWS Before Investing in Real Estate Investment Trusts!
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- เผยแพร่เมื่อ 22 เม.ย. 2020
- In this video, I discuss the dangers of investing in REITs and what you MUST know about REITs! Check out my Instagram (nickpeitschinvesting): bit.ly/3fkByXC
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In this video, I discuss the dangers of REIT investing and the 3 things you need to know about REITs before you invest! REITs, otherwise known as Real Estate Investment Trusts, can be a great alternative investment to buying real estate. You don't need a down payment, you don't have to deal with tenants, and you can earn passive income through investing in REITs. Furthermore, REITs are excellent dividend paying stocks and actually have very high dividend yields! However, there are several concerns I have with buying REIT stocks that investors MUST understand before investing into REITs, which I'll be discussing in this video.
Anyways, thank you for watching! If you did enjoy, please hit the LIKE button to support my channel - I would really appreciate it. Also, be sure to SUBSCRIBE for more weekly content on personal finance, business, and investing!
Please note that I am not a financial advisor. I create these videos for educational and entertainment purposes only. Before investing, make sure you perform your own research and understand all of the risks involved!
Music by Lakey Inspired - check out his channel here: bit.ly/2OIb6Kl
Cheers,
Investing Engineered
Nick Peitsch, E.I.T.
Do you own any REITs in your portfolio? Let me know!
Is O stock a REIT? If so, then I own that one haha
I own EPR , SPG
3500 macerich stocks
Yeah it's a great one!
@@NickPeitsch cool!
Real Estate provides cashflow, tax benefits, equity building, competitive risk-adjusted returns, and inflation protection on its own. Whether you invest in physical properties or REITs, real estate may help you diversify your portfolio and reduce volatility. Dividends are what got me into investing in REITs, great way to secure the accumulate wealth, I hold AMT, CCI & PSA. $290k in profits made in 2022.
Consistently investing in high quality dividend paying REITs & companies over the long term is a relatively easy strategy to create generational wealth. My "boring" REITs portfolio paid me over $4,000 in dividends last month.
It's time to make high value games! Discounted dividend stocks. Ever grateful to my CFP "Catherine Morrison Evan’’ I now have a six-figure REIT portfolio, which includes, but is not limited to; AMT, SPG & PSA.... I now have 606 shares of AMT which pays dividends of $3800 per year.
I want to play the long term game with well diversified fund. Please how can i reach this CFP of yours?
Most likely, you can run a google search on her name and find her basic information online; you are welcome to do further study.
Thanks for this tip. Her website popped up on the first page immediately I searched her, I read through her resume and it seems pretty tight. So, I dropped a message & hopefully she replies soon.
I'm 48years old living in California, I'm hoping to retire at 50 if things keep going well for me. Bought my third house last month and I can't be more proud that am i now. I'm glad I made great decision about my finances that changed me forever but now I can't seem to make any other smart investment.
The first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional like I did. If you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the years and enjoy the benefits of managing your money.
@@sherryie2 I agree, , I totally agree, I'm 54 and just retired with about 1.2 million in outside retirement funds, no debt and very small dollars in retirement funds compared to my balance of portfolio over the past 3 years to date. tbh, the role of the Fin-advisor can only be overlooked, not denied. just do your research to find a reputable one.
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@@AUstinnesc My advisor is the quite famous NICOLE DESIREE SIMON She has been making a fortune online worth millions of dollars in digital assets for a select few for years. Lately, these types of services have appeared that allow you to copy the results of the experts. She demonstrates how to copy it automatically using that system.
@@corrySledd Thanks for the info, i found her website and sent a message hopefully she replies soon.
The most important risk is management. Make sure to only invest in REITs that have good management teams. Many suffer significant conflicts of interest, especially in Canada. Stay away from REITs that are externally managed, unless they have very high insider ownership. That on its own should help you avoid many losers. I will soon cover some of the REITs to avoid on my channel. Thanks for the great video!
You can buy REITS during economic downturns to maximise $ per share. Because reits have very stable values you can clearly pick up a bargain! Be greedy when others are fearful.
Great video, people always get blinded by the benefits of an investment ignoring the drawbacks. Thank you for informing us of these.
It is easy to understand the value of reits because the property is regularly independently valued. You can buy reits when the share price is below the Net Tangible Asset value and sell when it is above the NTA. There is also a lot of security that comes from the long leases. And it is a great way to hedge against inflation, and now we are seeing a lot of money printing.
Yes, plus you get paid the distribution while you wait for the NTA to recover to its fair value which it usually does at some point in the cycle. Personally I own some REITS and try to reinvest the distributions in the REIT also so that value of the holding compounds even in the absence of any capital appreciation in the share price.
I own a reit with a historic 13% ea in a non taxable account, ecah dividends is reinvested in the reit. Great investment.
Awesome!!
what ticker?
What’s the REIT called?
Awesome info man! I am now smarter having watched this
Haha I'm glad to hear it!
Thanks for sharing this video, I found it super informative and as well easy to follow.
Glad it was helpful!
Thanks so much! We are really enjoying your investment videos :)
Girlfriends Guide to Finance thanks!!
Very important point about the distributions. That's exactly why I only own REITs in a tax-advantaged account
You're doing it right, Pierce!
Pierce Jordan - Personal Finance what you mean by tax advantage account ? You mean HSA or IRA ?
Quick Silver yes!
Pierce Jordan - Personal Finance thank you sir
I’m totally new to this. But what happens if you don’t own a reit in a tax advantages account? Can I transfer them to a tax advantages account?
I was literally about to comment, "Does a TFSA protect you from being taxed on REIT dividends/distributions" until 2:38 played lol.
To anyone reading and haven't gotten to this part yet, yes the TFSA will protect you from being taxed on REIT dividends aka distributions.
So glad I came across this video. Thanks for the info!
You got it man!
Thanks for the info man!
Highly considering discussing REITs on my channel and ran across this video in search of notes/tips/etc!!
DarrenJacksonTV Glad I could help!!
Very informative video. First channel I have subscribed to on TH-cam.
Most REITs are at all time lows right now, so I bought a lot of them recently.
Sumit Basnet nice thanks!!
I invested around 5% of my saving in vanguand reits ETF (VRE) and I didn't knew much about reits. Thank you for the information! You have a new subscriber! What do you think about bitcoin? Would you allow a part of your portfolio to bitcoin?
I would have bought bitcoin but I wouldnt buy bitcoin 🤡
90% distribution rule is only in USA, not in Canada
Very clear explanation, thanks!
4 hour work week, great book! Great video also
Yes! Thank you!
This is great. I was just thinking about making a video on $O to explain how REIT's work... looks like you (kinda) beat me too it 😬
Rick Daum hey there’s always room for improvement 😜
Great info, thank you !
Thank you for this explanation.
When you think they will recover to pre covid levels? Taking a while... currently own IVR, TWO and NYMT
*I own a good amount of REITs. Some lowered their dividends.*
Passive Income Tom nice Tom 👍 great passive income vehicles!
Yea they have been cutting in half like crazy right now
We're keeping our eye on this too... dividends on REITs were always taxed at higher rates (as ordinary income), but that was fine b/c they maintained higher distributions. Now that dividends are being slashed, the calculus is looking a little different 🤔
Remote Ventures hopefully some are stable!
So true but it is a long game Passive Income Tom
Very helpful guidence regarding REITS. Thank you for sharing the video.
Informative, Thank you. Subscribed
I have several RIETs in my portfolio and I have generally done well with them. But I have also taken my largest loss on any investment when one of the RIETs dropped 75% over the last year. I'm holding on to it for the time being since I think it's over sold. But I know I will never be whole on this investment.
Amazing video! Keep it up man! Quick question, talking about REITS do you prefer individuals or ETFS such as VRE, XRE, etc.
Thanks! And for me, I would probably invest in a single company like I do with bank stocks rather than an ETF to possibly see more capital appreciation! :)
Great video. Thank you!
As always great information
thanks!!
I know too little of REITs to invest in it myself, but great video Nick! Learned a lot
Zero To Hero Investing glad I could help out!
Great video! I love reits for (future) income. VNQ, ABR, NRZ, GLPI, LTC, O, IIPR ...all in my portfolio...I might be a little heavy lol
Nice! Just like I’m heavy in banks hahah
Excellent video. Very informative 👍
Very informative!
Great video. I like my reits for the dividends.
Hey can you help me
I'm based in the UK, investing in stocks and REITs, UK-based and US-based & some shares. My US-based stockbroker allows me to invest internationally. Thanks for sharing this info!
Always great to invest in internationally, how passive has this been for you investing from the UK.
Thinking of an investment that can make good passive income, dividend and REITs ain't a bad idea.
@@ryanwickham1707 my portfolio has seen a significant increase over the years investing in the market, my stockbroker Jeff Dakin whose in charge of growing my portfolio has always ensured there are numerous opportunities to diversify my Investments.
@@niyashaasad369 true.
@@markcyrus7898 I have always wanted to own some stocks which would serve as a means of passive income, would be glad if I can be in contact with your broker.
Found u off Daniel pronks’ channel - binging this content!
Thank you for the information. Nice delivery. You have a beautiful smile. I don't have REITs, but I'm thinking about it.
Thank you for this useful video! I learned new things about REITs, especially about the concerns that come with those investments.
About 80 percent of my networth is in stocks with the rest being in bonds and the value of my house. I plan on retiring young and selling my home to travel the world rather than renting it out. Don't want to deal with the hassle of renting. At the same time I do want to have some ownership of real estate in the US and REITS fit exactly what I'm looking for. So most of the return I get from selling my home will go towards REITS.
That sounds cool! Where you gonna travel?
Awesome info!
Hell of a thumbnail my man lol. Keep up the good work 💪
Ashy salmon 1.7 haha thank you!!
I have O and APLE so far, i would like to have DEA too
Good choices!
Great information! When I learned about REITs my mind was BLOWN at how amazing they are, but those points are very valid.
Thank you for this information! I will send it.
Very informative with honest comment.
Love the quarantine haircut man! I'm close to shaving it all off myself. Cheers!
Thanks Shane! That should make for an interesting video. Can't wait to see haha. Cheers
I thought he is a cancer patient and that he is in a hospital gown, and was making this video while waiting for treatment.
Then again he might be in a psyche ward.
Evan Erickson , Same here! 🤣 I thought he’s in a hospital gown! Bless his heart!
That's very interesting. An excellent informative video.
Very nice video, thanks!
I am waiting for the market to go lower to buy VNQ.
Matilde C Calderon I might as well!
I would add, Real estate is a good diversifier and " not correlated " to stocks
I would agree!
Not sure about where you are, but im Australia they are almost 100% correlated to the stock market.
@@GrimTTL Hello, I'm in Canada, but this article explains my initial comment. Correlation between real estate and stock market is around 0.2 to 0.4, which is relatively low. Reason is they can be affected by the same variables, but not at the same time. awealthofcommonsense.com/2018/09/is-real-estate-a-non-correlated-asset-class/
I don't know about Australian real estate, but anyway a diversified REIT will do the trick.
great insight!
Grim thanks!
Great video!
Nice video very well spoken, I own atleast a half dozen REITS and live off the dividends I get about 5500 a month after taxes which is a pretty good income I could not get on regular stocks I did not buy them for share value just for the dividends, one of them had lowered the dividend during covid { others did too } when the share price dropped by almost 2/3 rds fortunatley I bought most of my shares in the low point and they are now up by 90% but the dividend has not returned to the pre-covid level even with the share price approaching pre-covid they did raise the perferred back up but common only went up by 3 cents this video seems to offer very possible reasons for it thanks for the insight I have been debating dumping them due to the high share price it would take me a long time to make that kind of money from the dividend alone.
thats my plan too to live off the dividends, by the way, when markets crash will you just add to your REIT position, just buy more? lower the stock price the higher the yield gets.
How much investment do you have to generate that much of cash flow?
@@shrutighughal8171 with a 5.5% yield he has about 800k in Reits
Awesome content Rick, i own, NRZ, IVR & RioCan, good to know about the info before investing in REITs, thanks for sharing, thumbs up
Right on!
1st video...great content, succinctly stated. Thanks!
Thank you!
Nice video bro ! Keep it up !!!
Ionel Masca thanks 😊
Such great insights, share buy backs are nearly essential. Right now I like PFE, FMC and CPT. I'm a new TH-camr and if anyone in the comments needs solid stock analysis, I can help. Thank you in advance!
wish I saw this before I bought a bunch of reits...
Peter Hsu they are still solid investments, but just some things to be aware of! I’m sure you’ll be fine
@@NickPeitsch ... I got RioCan and Allied (2 grand). But I didn't know anything about Reits until I saw your (Very Informative) video. A concerning factor is Amazon which may affect malls, and a recessionary environment may hurt office rentals. Maybe I should have dumped the money into TD bank stocks instead. Love your videos!
Peter Hsu that is a concern, but it’s similar to Tesla taking over the oil and gas industry - a long ways away! You should be fine with RioCan since they’re one of the biggest in Canada. And thank you!!
Thank you for sharing. I learned a lot.
Cheers
quality video - thank you!
Thanks! You got it
5% yield is actually not that great, REITs that pay around 10% are easy to find.
Not easy anymore, 8% yes. Most stock screeners will find over 10%, but unknown very small companies. Even the mReits are paying that high. Unless you have found some jewels
@@stevenobinator2229 some are under 10%, some are over so an overall portfolio average yield of 10% is what I'm driving at.
Love REITs for passive income! But definitely not capital gains 😂
Exactly!!
💯
Yea, something we're keeping our eye on... seems like key part of the value prop for REITs was their high distributions, which allowed you to justify the higher tax rate (being non-qualified dividends). Now that dividends are being slashed, net returns aren't looking so hot either 🤨
17% div 28% yoy capital growth.. its all about when you buy it and how good the managment is.
If the prices rise with inflation why would you not get capital gains.
Thanks. Very helpful info .....
Excellent video as always. I currently own GRT and PLZ. I will probably look at Rio Can or HR or go the ETF route like VRE.
Nice! Yeah I would personally go the ETF route I think :)
IVR, GPMT, NYMT, TWO, NRZ, ABR, AHH 💪🏻🐗
You should do a portfolio reveal at this point, think it would be insightful and calm some peoples nerves too :)
David Sitarek I’ve been thinking about it and yeah I might!
Agreed! Would love to see examples of portfolio reveal during this time
Investments suck, cause I'm so addicted to them! I'm curious to check out your other videos.
EDIT: Just finished the video, thanks for the info! I've got some REIT investments already, but I must admit this was really helpful.
Thanks for great info
Itay Yahel you got it man!
They like to keep the stock value fixed by dilution. I setup dividend reinvestment. It creates a compounding effect, which is powerful. You then look at total equity you hold, not their stock value.
Great point on the compounding effect
When i invest with reits im not hoping for grwoth. I just enjoy free passive inc. for growth i go with tech stocks. I sometimes swing trade with reits cause i know they go up and down ! Easy money !
Pokiblue Yes. Only thing to watch out with REITs is that they can be get hugely over leveraged and (as the COVID crash showed) can dramatically lose value if there’s instability, even when property values haven’t budged. They’re actually sneaky because they can look very stable for long periods then suddenly tank. Now isn’t a bad time to buy in though, as they’ve been mostly corrected.
@@deraktdar i swing trade some reits looking at the RSi making some good 100$ swing. But yea as the REITs go down i use the dividends to lower down my average cost ! I have 1 swing trade account and 1 account that i never touch except increasing my positions. Im extremely patient and look for those opportunity when it drops, i try to detect a patern and secure a 75% chance swing trade.
What do you mean by "dilution"? Also, what do you mean by then looking at your total equity and not focusing on stock value?
Really good informative breakdown of REITS just when I needed it. Many thanks
Very welcome!
Solid work here - I have been considering but do not own any REITs in my portfolio. Largely because of the capital appreciation issue. You've got a new Sub!
Invest with Blev thanks a bunch man!
thanks this is a nice to know info
Found your channel, I am looking at investing into REITS because I heard it's a great way to avoid certain taxes. Thanks for creating this video and also love the 4 hour workweek book int he ack ;) just earned my sub and like!
Joy Mae awesome thanks! Glad to have you here 😎
I just turned 19 and I'm looking into investing into REITs along with other invesments (ROTH IRA, stocks, forex, etc.) and this video was extremely helpful. Thanks for posting! I'd love to hear any advice anyone could provide
Brian Chang awesome 👏 and glad I could help out!
One other thing which may not apply to many of us but I think would be good to know. The REITs I have, provide almost no credit [income] when trying to place a covered call option with them. With regular stock, I have been able to generate good income with covered calls especially when times were tough with that stock.
Is it best to keep Reits in a Roth or brokerage? Do you have to pay taxes in a brokerage account if you reinvest the dividend?
Very well done video. The three concerns for REITs are things I've noticed many new investors (or even some who have invested for years) are unaware of. The issues with taxation and dilution will impact overall returns, and depending on our tax situation, we certainly need to be aware and planning accordingly.
Stock Investment Analysis absolutely! Thanks for dropping by again :)
REITs are wonderful when your networth and income are still pretty low. Because tax isn't much of an issue there. But once your income is high, stocks could be better for legally reducing taxes.
Do stocks have lower taxes? Is this on a certain law? Sorry I'm pretty new at this :(
Pay your taxes. I rather buy reits and pay taxes
Pay your taxes
THANK YOU for SHARING this with the COMMUNITY....................Cheers
**
Superb content!!!
Ram Ram thanks!
This is exactly what I was looking for, thank you! Video starts at 1:42
Jin B. You’re very welcome!
Investing in REITs in my tax advantaged accounts. Kind of scary these days. Might look into retirement communities, I don’t think the virus will do what people are thinking it will in those communities. Might look into the Royal Bank of Canada. Thanks!
(Relentlessly) 😉
Nice man! RBC will be a solid dividend payer through this quarantine I believe :)
How do you feel about SPG and IVR?
Hi, great video, question on the point No1 for the tax on the dividend what about when you are a non-us citizen living outside of the US and participate in a US REITs?
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Or losing most of it.
I've been studying and looking hard into EPR especially at it's current price. This is a long term game. Everybody wants quick money (which is nice) but at the same time, preparing for the future is a must. With reinvesting your returns and steadily adding more shares you could easily be bringing in 1k/month or more potentially within 10-15 years if you're wise with your money. That does seem like a long time when you say think of it, but for younger people (20-30y.o.) then it will be just in time.
Thank you for your comment
EVO Brand, why did you choose EPR over O or WY? EPR seems vulnerable to pandemics which might be good times for buying into the company. O and WY seem to be pandemic proof, especially since people have to continue paying their rent regardless and what better way to social distance than in a forest.
Killer video man!! share more please.
Jose Rojas thanks! I will man!
Like your video. Raised out some good point like share dilution and cash flow per share that we need to consider and concern.
Thank you!
But, I love REITs :(
REITs are solid investments if one understands how they work :)
I've been watching quite a few videos on this and I still don't understand how REIT companies profit from this when they have to pay out 90% (in some cases 100%) of their earnings in distributions/dividends. I'd like to understand. Thanks
They dont have to pay tax
@@sixpackbodybuilding So the portions of their assets/business portfolio that is not related to REITs is tax exempt? and/or the 10% from profits they retain is also tax exempt? If so that makes sense on how they benefit from REITs
Same. Like why would a company want to become a REIT then if they just give away 90%+ of their taxable income…
Can’t really grow on 10%
Hi Nick / a great 👍 presentation - I own Riocan under a RRIF / and I purchased the units back in May of 2020 / for a cost of $15 - which works out to about a 50% reduction off their NAV / capital gains is protected under a RRIF .. so I'm comfortable to take a profit on a portion of my position... down the road / Riocan is very active developers ... so even though there was a recent dividend cut back in December - the yield is still around 5.5% - and they've diverted these savings back into their development projects.. any thoughts 😁 ?
is it wise to buy a reit ipo at this time given that we are on a 'lockdown' ?
Despite all the setbacks and disappointments in 2020, bitcoin didn't hold back anything from us, it left our faces filled with smiles and our pockets full too 😊
You see many people remain poor because of ignorance
I wouldn't say just because of ignorance, but also because of too many scammers in every business adventure like trading for instance
For real there are scammers but there are also real brokers out there looking for investors
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HAHA I did this one myself, sorry to hear man!
Investing Engineered I do own Realty Income and Simon Prop. It’s a rough go now, but hopefully things level off and malls open up. Once that happens, hopefully SPG goes back up again. ✌️
@@Javier_Jimenez71 Yeah I'm sure the companies will recover with time! Real estate always prevails
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Wow! Great information
Glad it was helpful!
Hi,
I am a Canadian citizen but not a Canadian resident for tax purposes. (not US resident either).
Would you recommend I invest in REIT stocks and/or REIT ETFs? Or would you suggest a different route?
- Thank you
For as long as I can remember I’ve never settled with random brokerages I invest more effectively with the help of my fund manager Ronald B. Furey. Profits have been consistent and with his skills I don’t bother with the complexities of the market, I just invest and take profits
Does Mr. ronald teach you directly? how does one reach him for inquiries
@@Axelk8 No he doesn’t, he provides an investment management service where he trades on my behalf among other investors among his clientele list using his superior expertise. I take the extra effort to monitor the trades and learn a few professional tactics, normally I just provide substantial capital and stand by for withdrawals. This way it creates room for a more efficient and profitable trading process
@@Axelk8 You can reach out to him on what s-
app
+ 1 3 8 5 4 3 7 1 1 5 8
@@GarmanH Sounds interesting but how do you handle the risk of him failing to deliver or simply stealing from you? please forgive the awkward questioning
Most REITs raise funds by having Dividend Reinvestment Plans. So on the point of share dilution he isn't entirely correct. Any listed company will have share dilution by issuing new stock, not just REITs.