Real Estate Investment Trusts: Are They a Good Career Path? | BiggerPockets Blog

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Have you always been interested in getting into the real estate industry? Maybe you’re not keen on working as a real estate agent but you know you want to be involved in the industry in some way.

You may be a great fit for REITs if you have a good mix of real estate and finance experience. But you may be asking yourself, “Is real estate investing a good career path?”

It could be for the right people. The key is understanding the personalities and skills that work best for working in the real estate investment trust industry and the pros and cons.

All jobs have good and bad sides that you should understand before starting a new position, including those in the real estate industry.

What are REITs?

real estate investment funds, Known as real estate investment fundsThey are publicly traded companies that act as trusts. Real estate investment funds Owning, managing and selling real estate, and investors can buy company shares to obtain a diversified real estate portfolio without owning the real estate themselves.

The Securities and Exchange Commission regulates publicly traded REITs – the trading of shares on a stock exchange, Like regular stock.

Like most real estate investments, there are many options for REITs and many opportunities to work in the REIT industry.

Understanding the different types of REITs and the jobs available in each can help you choose the perfect career.

Real estate investment funds

Mortgage funds invest or purchase mortgage debt on commercial real estate. The real estate company acts as a lender, not as an owner. Mortgage REITs may fund real estate investors directly, or they may buy already funded mortgages at predetermined interest rates.

Investors earn interest from the borrowed monthly, as well as a return on the borrowed capital through regular monthly payments. Like any investment, there is a risk of default and total loss, but a good REIT diversifies its money through multiple investment opportunities.

Real estate investment funds

REITs own income-producing properties such as hospitals, shopping malls, and office buildings. Rental income is often the main source of income for REITs. Tenants of rental properties pay a monthly rent, which provides income for the REIT.

REITs also make profits from the property capital gains that investors earn when the REIT sells real estate. Most REITs are long-term investments because real estate companies hold commercial real estate for the long term, but some may be shorter or even fix-and-flip.

Hybrid real estate investment funds

Hybrid REITs do a little bit of both equity and mortgage REITs. They invest in real estate to get regular income and mortgage loans to offset the risks of equity investments. Think of it like portfolio diversification. The stakes are reduced when you don’t put all your eggs in one basket. This option works best when mortgage rates are high, as it can offset any risk of vacancies or non-paying renters in REITs.

The nice thing about hybrid REITs is that you get the best of both worlds in a single investment. You don’t have to worry about managing multiple investments to diversify risk and avoid total loss.

What do REITs own?

REITs own many types of real estate, but they most often buy commercial, usually income-producing real estate. Some REITs may diversify and include real estate to hold for long-term capital gains. Examples of commercial real estate owned by REITs include:

• Residential buildings
• office buildings
• shopping centers
• Warehouses
• Medical buildings
• shopping centers
• individual retail properties

What exactly does a REIT do?

A REIT is like a mutual fund manager. REITs buy, manage, and sell real estate. They may hold several properties for the long term, acting as estate managers, collecting rent, and maintaining them. Some REITs buy real estate to sell immediately for a profit, and others diversify by including mortgage loans in their REITs.

Only some companies qualify for REITs

There are strict requirements for companies to qualify for REITs. The most important factor is that most of the company’s assets and income are related to real estate. This means that the company must invest most of its capital in the real estate industry, whether it is income-producing real estate, short-term purchases, or mortgage debt.

In addition, the REIT must share at least 90% of its taxable income with the shareholders. REITs usually do this in the form of annual dividends.

In addition, REITs must follow the following guidelines:

• It must be a taxable company
• You need to hold fully convertible shares
• No more than five individuals may own more than 50 percent of the company’s shares
• At least 75% of the income must come from the real estate industry
• At least 75% of the REIT’s assets must be invested in real estate
• You must have a board of directors

What makes a REIT a good career?

If you are focused on working in real estate but don’t know where to start, working for a REIT can be a good career path because you have many job opportunities. If you are new to the real estate industry, you can start in a management position and work your way up the ladder as you master the art of real estate investing.

What you do next depends on the skills you acquire; Whether you want to work as an asset manager, property manager, analyst or portfolio manager, the opportunities abound.

What personalities are usually drawn to this career path?

Anyone interested in the real estate market, investments and property management would benefit from working for a REIT. It works best for people who like to talk, understand the risks, and are good at making a decision. You must be a self-starter and be able to adapt to fast-moving situations.

The skills you will need to be successful

Every job in the REIT industry requires different skills, but in general, here’s what you need to make REITs a good career path:

• Excellent attention to detail
• Super communication skills
• Excellent management skills
• Comfortable with risk and able to assess it
• Knowledge or ability to learn about real estate investments

What Kinds of Jobs Are There in REITs?

A real estate investment trust career path can start as a maintenance worker, secretary or assistant. This ground floor opportunity is a great way to navigate the real estate career path.

In lower-level positions, you can get a comprehensive view of how REITs work and which position might interest you most. Some jobs require degrees, but most require extensive knowledge of real estate investing and how REITs work.

asset management

To work as an asset manager, you need extensive experience in the real estate market. You must be able to decide which properties to buy and sell. You must also be able to determine how much debt you must acquire to purchase the real estate and assess the expenses incurred when operating the real estate.

Asset managers oversee the property, making sure that all expenses are in line with expectations, and making adjustments as necessary. There are many levels of asset managers, so you can start at the mid-manager level, but in order to reach the executive level, you will need extensive experience in real estate investing, including as a property manager, so you understand not only how to buy, but also to manage the property. .

Properties Management

You can work as a property manager for REITs in a variety of ways. In the beginning, you can work for a property management company that manages several properties for REITs. As you gain experience, you may get a direct job with a real estate investment trust as a property manager.

Not all property managers work directly at a REIT, and some real estate investment trusts outsource their property management needs, but if you have a history of property management, it may be easier for you to get hired by REITs.

development managers

If you are looking for a good REIT career path to climb the ladder, working as a development executive is the best way to start.

Development executives make solid decisions regarding real estate projects, pay close attention to market fluctuations, set profit and debt targets, and focus on the big picture to make sure it’s in everyone’s best interest and will pay dividends for investors.

Acquisition Analysts

Acquisition analysts are a step below development executives, but they’re also a good career path for anyone interested in REITs.

Analysts evaluate potential investment opportunities and recommend (or dissuade) them based on their findings. Analysts may identify great residential rental properties, commercial buildings, and other real estate that fit well into an existing investment fund.

Advantages of working for a REIT

It also determines the answer to the question “Is real estate investing a good career path?” Consider the advantages of this lucrative career path.

• You can learn a lot about the real estate market without risking your money. Starting at the bottom, you can learn about actual real estate without owning it yourself and you may eventually become a real estate investor one day.
• You can put your analytical skills to work while making the most of investing in commercial real estate with other people’s money. A real estate analyst helps executives make important decisions, so it’s a very important job.
• You may not need a certification, though as you climb the ladder it will help, especially if you want to get into financial analysis or preparing financial statements for a REIT.
• You can move to several jobs while staying with the same company, or even change REITs, climbing the ladder as new opportunities become available.

Disadvantages of working at a REIT

As with any profession, it’s important to note the downsides when determining if REITs are a good career path.

• Real estate market trends can fluctuate wildly, making your job volatile and stressful. You must be able to handle high-stress situations because you are dealing with other people’s money.
• REIT professionals must understand and stay informed of the latest real estate and financial market regulations. Not only should you be up-to-date with the latest updates, but you must have ongoing education to remain effective in your position.
• You may have to start at the bottom and work your way up the ladder. You probably wouldn’t start out with REIT asset manager positions, for example, unless you already have extensive experience as a real estate agent or in other real estate positions.
• The career path for a REIT can be confusing, especially if you don’t have experience in the financial markets. REITs have many moving pieces, including investors, property owners, property managers, and many other investors in the process.

Final Thoughts – Are REITs a Good Career Path?

like you Explore your options In the real estate industry, you may discover REITs as an option. You could be a perfect fit if you are prepared to work many angles of real estate transactions, have analytical skills and love a good challenge.

Whether you’re confident in real estate investing or want to get your feet wet, working in the industry before investing your money can be the perfect opportunity.

Note by BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.