Real estate investment trusts (REITs) are becoming an increasingly popular investment vehicle for income-seeking investors. But what exactly is a REIT? And is it a good career path for those interested in the real estate industry? Let’s take a closer look.
What are Real Estate Investment Trusts?
Real Estate Investment Trusts are a type of investment structure in which income-producing real estate is purchased and managed on behalf of investors. REITs enable broad access to real estate investments by pooling capital from multiple investors, allowing funds to be used efficiently and quickly for large-scale real estate purchases.
REITs are just like stocks, trading on stock exchanges, and are purchased or sold as you would with any traditional method. The best part is that REITs offer dividends to their investors! Appealing to investors who enjoy dividends, REITs are obligated by the Internal Revenue Service (IRS) to distribute at least 90% of their taxable profits as dividends. An added bonus is that these companies do not pay corporate income tax. Like any publicly traded stock, they are regulated by the SEC.
When income is generated through these invested assets, the profits are shared among the investors. Investments are often diversified across different assets including shopping malls, apartment buildings, industrial buildings, and office buildings.
Generally, investors who purchase a share of a REIT do not have to fully manage or maintain its properties; that is left up to experienced asset managers. In exchange for their time and expertise in operating properties effectively, these asset managers receive a portion of the profits generated from the trust’s holdings.
The benefits of working with Real Estate Investment Trusts
Investing in Real Estate Investment Trusts can be a great way to get into the real estate business without having to personally own and manage physical properties.
Working with REITs provides several key advantages, including diversified investments across multiple types of real estate, access to deep expertise on a range of property issues, and opportunities to benefit from equity market appreciation on portions of the portfolio.
Furthermore, REITs also offer investors added liquidity and easier dividend distributions when compared to direct investments in physical real estate. For those looking to get into the lucrative world of real estate investing without taking on a large amount of risk or work, working with REITs is certainly worth considering.
What jobs are there in the Real Estate Investment Trusts industry?
Jobs in the REIT industry involve the management, acquisition, and ownership of real estate properties. Some of the roles in this sector include:
- REIT Analysts evaluate potential investments in real estate and recommend investments based on their research and analysis. As a real estate investment analyst, you play an integral role in analyzing the financial stability and value of properties in a portfolio. The job involves market research, creating financial statements and financial projections, evaluating income generation potential, and creating property valuations. Lending support for loan closings and working with the servicing division are among your responsibilities. Depending on who you’re employed by, duties can vary; however, creating investment reports that cover every necessary detail from borrower data to property maps is generally part of them. These documents must meet both company and investor standards, so comprehensive insight into all related topics is essential. Average Salary – $85,000.
- Portfolio Managers oversee a portfolio of real estate investments and make decisions regarding acquisitions, dispositions, and capital allocations. A REIT portfolio manager is responsible for managing a portfolio of real estate investments. In addition, they must assess current market conditions in order to identify potential investment opportunities and research those investments in order to make informed decisions. The portfolio manager must also oversee the operations of any real estate property owned by their clients, including tenant relations, budgeting, and financial oversight. Average Salary – $144,000.
- Property Managers / Asset Managers are responsible for overseeing the operations of a real estate property including tenant relations, budgeting, and financial oversight. A REIT asset manager is responsible for managing and monitoring the assets owned by a Real Estate Investment Trust. They are responsible for overseeing day-to-day operations, such as tenant relations and rental collections, as well as maintaining accurate records of REIT assets. The asset manager also conducts market research in order to identify opportunities for improving asset performance, negotiating lease agreements, and preparing budgets. Additionally, the asset manager must coordinate with other departments and stakeholders to optimize asset performance and ensure compliance with regulations. Average Salary – $76,000.
- Investment Bankers provide financial advice to clients looking to invest in the REIT sector. REIT investment bankers specialize in helping Real Estate Investment Trusts raise capital and navigate complex transactions. They are responsible for researching and analyzing financial markets and providing guidance to REITs on how best to structure investments, debt offerings, mergers, and acquisitions. Additionally, REIT investment bankers must assess the legal and regulatory environment of potential strategic moves to ensure compliance with applicable laws. Finally, REIT investment bankers must also be adept at developing relationships with potential investors in order to source new capital for clients. Average Salary – $177,000.
- Acquisition Analysts are responsible for performing due diligence on potential real estate acquisitions. This includes reviewing financial statements, analyzing market data, and conducting site visits. The goal is to identify risks and opportunities in order to make recommendations to the decision-makers. Average Salary – $63,000.
- REIT Investor Relations Managers are responsible for communicating with shareholders and potential investors. This includes providing information about the REIT, issuing press releases, and organizing investor meetings. The goal is to promote the REIT in a positive light and increase investment. Average Salary – $93,000.
The following professionals can also work in the REIT industry:
- Commercial Analysts
- Construction Supervisor
- Marketing Professionals
- Accountants
- Real Estate Property Appraisers
- Customer Service Representatives
- Real Estate Attorney
What degree do I need to work for a REIT?
The level of education for a REIT career varies from a high school diploma for jobs involving the maintenance of properties to an MBA for investment banking activities.
To work in the more lucrative part of the REIT sector, you typically need at least a bachelor’s degree in finance, accounting, economics, or real estate. Additional certifications and/or master’s degrees can be advantageous as well.
Real estate investment analysts, for example, typically have four-year college degrees with a focus on real estate, finance, or business administration.
Real-life examples of people who have made a career out of working with real estate investment trusts
Real Estate Investment Trusts can be a great career option to amass personal wealth, and there are a number of people who have made successful careers out of working in the sector. Several high-profile successes include billionaires Jeff Greene, Sam Zell, and Tamir Sapir – who all built their empires in the REIT sector.
Sam Zell gained his reputation as a real estate mogul after building up Equity Group Investments (EGI) over a lifetime, while Jeff Greene saw success in the California market during the late 1990s and early 2000s with Beverly Hills-based property holdings.
Meanwhile, Tamir Sapir started with New York City properties in the 1980s before gradually expanding into international markets.
Their strategies and experiences provide inspiring models for those looking to enter this field and make similar progress in the future.
The REIT industry is Cyclical
The REIT sector is cyclical, meaning it can experience booms and busts based on how the economic environment impacts the real estate market. This means that the prices of REITs tend to be more volatile than other types of investments, and those who have careers in the industry will have to deal with a choppy job market and be able to cope with stress. It can get particularly stressful dealing with real estate investors when the reals estate market or rents are down.
For example, 2022 was tumultuous for REITs as a result of the sudden and drastic increase in interest rates. As borrowing costs rose, it became more costly for REITs to take out new debt or extend existing ones, thus making potential acquisitions more expensive than before. This spiral led to decreased valuations which consequently meant even pricier borrowing conditions. Such conditions can make careers in the REIT workplace stressful.
Is Real Estate Investment a Good Career?
Real estate investment trusts can be a great career.
It’s important to remember that the REIT industry is cyclical and therefore subject to fluctuations depending on market conditions, so it helps to be prepared with an understanding of how these dynamics work. Additionally, having the right qualifications such as a bachelor’s degree in finance, accounting, economics or real estate will help increase your chances of success when working in this field. Finally, taking inspiration from successful professionals like Jeff Greene and Tamir Sapir – who have made fortunes through investments in REITs – should give you some insight into what strategies might work best for reaching your goals.
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