I understand that REITs are a great investment. However, do they have enough liquidity, and buyers and sellers (Volume) to be traded?
If so, which sectors are considered volatile, and which are considered less volatile.
I have a strong interest in real estate and figured I would translate this interest into the markets. However, are REITs worth my time studying and investing in?
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You mean like buying stock in? Depends on if it's a Public or Private REIT.
If you want to invest in public, it'll cost yo like eight bucks to pick up a share of Vereit.
If it's private, expect to have to fork up somewhere between $25k and 1mm to buy a share if you're even allowed to buy in. Not nearly as liquid as a public one, but the returns can be a lot better.
Public REITs I mean. The volumes seem to be really low. I'm looking at data center REITs and the largest REIT Digital Realty Trust, in that sector has only 500k in volume. It seems like REITs are only a good long-term investment.
Data centers are one of the smallest sectors in the public REITs space. Look at the malls, strip centers, apartments, office and industrial. They all have plenty of liquidity in the larger companies.
You don't buy REITs to make profits in trade. I mean i guess you could, but the main reason people by them is for cash flow. Go look at their dividend yields. Simon's returns like +4%.
Public REITs are required to distribute 90% of their cash to shareholders.
The public REIT game is all about relative values within property types. Hard to turn a buck TRADING these bad boys because share price premium/discount to NAV doesn't get too wide from one REIT to another of the same property type, (regional exposures/quality/tenant exposures/idiosyncrasies aside), and "events" (e.g. ARCP's blow-out a few years back) don't happen too often. Unless you want to get a Green Street subscription, these are probably better as medium-term investments. Watch leverage, tenancy exposures and regional exposures to overbuilding
What I never understood about REITs was if someone wanted RE exposure why they'd chose that over a direct investment. I briefly looked into them awhile back and seemed like something like a 2% dividend yield was par for the course. Going direct, even in some of the more over-heated markets, you could probably crack double digits on a levered basis. Diversification and liquidity are the obvious answers, but I'd value those at maybe 2 or 3%. Still not close. I'm know this didn't answer your question, sorry. Just never understood the appeal.
some people don't have a couple hundred thousand to a couple million to get direct exposure to RE.... I mean I assume this is obvious....
Couple hundred K seems a tad rich but point taken, thanks. Definitely overlooked that.
There are plenty of ways to get direct exposure to CRE without buying public equities. Deal by deal equity syndication has been around forever in this space, and these days it's even easier with real estate crowdfunding sites
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