How many jobs are available in real estate investment trusts?


Objectives

  • What does real estate mean?
  • Why invest in real estate?
  • Real estate investment trust
  • What is real estate cycle?
  • Present scenario
  • Case study

Introduction

What is real estate?

Real estate is a broad term for properties that have an intrinsic value such as real estate and real assets such as equipment and financial assets. Some specific types of real estate are:

Building property: Building property refers to buildings and real estate assets that are owned by real estate owners.

Land property: Land property refers to agricultural land, residential properties (buildings and land), or industrial properties.

Inherited real estate: Inherited real estate is a type of real estate owned by an heir.

Why invest in real estate?

Real estate investment means investing in real estate asset classes such as commercial property (office, retail, industrial, and residential properties) and real estate.

The real estate market is an important economic activity, which has a number of advantages compared to other asset classes.

The size of the real estate industry has increased consistently over the past decade from less than $4 trillion in 2000 to $17 trillion by 2013. The real estate market is not directly affected by the business cycle as long as long-term investors stay invested.

There is a steady demand for real estate products, particularly in developing countries where real estate transactions are often funded by pension plans.

A real estate investment has generally lower risk compared with other asset classes as long as a real estate investor is experienced and can hold the asset for a long time.

There are many types of real estate investment vehicles. Real estate investment trusts (REITs) are one of the most widely known. They raise capital by issuing units, which can be purchased by individuals, institutions, and governments. The REIT structure is also a tax-efficient method of investingin real estate because REITs do not pay corporate taxes.

The success of REITs in recent years has led to an increase in both the demand and the supply of these investment vehicles, especially in the United States. REITs have delivered a 9.2 percent annualized total return from 1990 through 2014.

Investing in REITs can be attractive for investors because they have a low correlation with the US stock market and long-term Treasury bonds.

Real estate investment trusts (REITs)

Real estate investment trusts (REITs) are a means of buying securities in the REIT (real estate investment trust) space that owns real estate and offers investors a way to invest in real estate without the restrictions of a particular asset class or geographic area. REITs have generated strong returns for investors during periods of increasing economic growth and accommodative monetary policy. However, REITs have had limited success during periods of economic recession or deflation. Since the Federal Reserve embarked on its current strategy of quantitative easing, REITs have posted strong returns, but other investments such as private equity, hedge funds, and real estate debt have experienced considerably less success. On average, REITs have posted an above-average total return of 6.13% per year, compared to the S&P 500's 5.81% annualized return since 2003.

In our Case Study, we use real estate investment trusts to explain why the best year-to-date return on the S&P 500 Index is close to zero. This article provides examples and insight into some of the global trends that have impacted the U.S. stock market and explains the causes of the outperformance and underperformance of REITs. Our analysis explains that even during periods of very high inflation or deflation, the real estate cycle and not the stock market is the most important predictor of financial market performance.

Key Takeaways

GDP Growth and Inflation: The post-World War II United States was characterized by strong GDP growth and moderate inflation. Inflation, however, has been very weak. This environment produced above-average total returns on the S&P 500 and lower volatility in prices.

The post-World War II United States was characterized by strong GDP growth and moderate inflation. Inflation, however, has been very weak. This environment produced above-average total returns on the S&P 500 and lower volatility in prices.

Credit and Equities: Credit has been available to new entrants in the US economy in the post-war period. This increased demand from new entrants resulted in higher prices and therefore stronger demand from existing borrowers and lower spreads. The current credit cycle in the United States is nearing its end as we enter the later stages of the economic cycle.

Credit has been available to new entrants in the US economy in the post-war period. This increased demand from new entrants resulted in higher prices and therefore stronger demand from existing borrowers and lower spreads. The current credit cycle in the United States is nearing its end as we enter the later stages of the economic cycle.

Equity Markets: Stock markets have been affected by the global shift in wealth and income. During periods of low inflation or deflation, stock markets are a useful indicator of future economic growth. When the United States had low inflation or deflation, the equity markets were highly volatile and generally performed poorly.

Here are some questions about real estate investment trusts (REIT) that a newcomer in the industry may face.

In what kind of asset class is a real estate property investment trust (REIT)?

Asset class

A real estate investment trust (REIT) is an organization that owns and invests in real estate properties. According to the IRS code, a real estate investment trust has two types of stock: Class A and Class C. The class of stock refers to the voting power in the company. All of the stockholders own Class A and Class C stocks.

Class A

Class A stocks have full voting rights.

Class C

Class C stocks have limited voting rights.

1. What is the primary purpose of a REIT?

In order to help real estate owner manage the inherent risks and uncertainties involved in the real estate business, a real estate investment trust was created.

In order to further attract and retain investors, real estate investment trusts have a secondary goal of maximizing the value of the real estate assets. The primary purpose of a real estate investment trust is to provide stable, long-term income streams to its stockholders.

2. Is a REIT a real estate firm?

No. A real estate investment trust is an organization that operates as a taxable entity under IRC Section 408.

3. What is a passive investment?

According to a definition provided by the Council of Economic Advisors (CEA) in their publications, passive investment is an investment in a business that the investor doesn't participate.

In order to qualify as a passive investment, the investor has to make all the decisions related to the business, just like he does for an index fund.

4. What are the basic steps for an investor to start buying REITs?

According to an analyst, one can buy an index fund and then buy an index fund REIT as a diversified and somewhat passive investment.

5. What kind of capital gains can a REIT owner sell when he wants?

When you buy REITs, you are buying a tax-deferred deferred tax asset and you get to sell that deferred tax asset when you want to.

Most REITs don't report income, instead, they report the net gains and losses on their assets. For example, a REIT whose portfolio has increased in value for a given period (such as the period ending in January) would report the increase in assets minus the decrease in liabilities.

What is the real investment cycle? 

The real investment cycle is the period in which an owner takes possession of the real property and starts looking for tenants to lease it.

The active real investment cycle is usually two years for Class A properties and four years for Class C properties.

REITs invest in properties and provide lease income to investors, who own the stock. This income stream is referred to as return on equity (ROE).

There are two kinds of return on equity that a REIT must track: Operating income and net income.

Operating income measures the operating income, which consists of rent, depreciation, and amortization expenses. It is collected as cash, which is distributed to shareholders as dividends.

Net income is a computation of the company's net income, as well as other income, deductions, and expense items, such as an increase in the value of depreciable property and gains on the sale of depreciable property.

Present Scenario

The share price of a REIT can go up, down or sideways if it does not do any other work to increase or decrease earnings per share. In this article, we will talk about the different types of REITs, their operating strategies and how you can evaluate them for investment.

Here are the types of REITs that I mentioned above:

Domestic REITs are made up of those operating in the U.S. Domestic REITs may invest in multi-family apartments, office buildings, data centers, shopping centers, hotels, manufactured housing, health care facilities, nursing homes, student housing, self-storage facilities, and timberlands.

International REITs are companies that invest in real estate outside the United States. The only two real estate types that may be listed as foreign REITs are real estate investment trusts (REITs) listed on the Toronto Stock Exchange (TSX) and real estate investment trusts (REITs) listed on the Frankfurt Stock Exchange (FSE).

A complete list of jobs that are available in real estate investment trusts is given below:

1. Leasing agent

National average salary: $22,677 per year

2. Foreclosure specialist

National average salary: $40,595 per year

3. Leasing consultant

National average salary: $43,428 per year

4. Property manager

National average salary: $45,664 per year

5. Title examiner

National average salary: $49,795 per year

6. Lease administrator

National average salary: $50,337 per year

7. Real estate manager

National average salary: $53,951 per year

8. Mortgage processor

National average salary: $55,066 per year

9. Escrow officer

National average salary: $58,477 per year

10. Real estate appraiser

National average salary: $58,850 per year

11. Compliance officer

National average salary: $59,190 per year

12. Home inspector

National average salary: $60,825 per year

13. Leasing manager

National average salary: $63,421 per year

14. Commercial property manager

National average salary: $65,903 per year

15. Property developer

National average salary: $71,612 per year

16. Real estate associate

National average salary: $81,902 per year

17. Mortgage broker

National average salary: $91,171 per year

18. Realtor

National average salary: $98,413 per year

19. Real estate agent

National average salary: $106,000 per year

20. Mortgage loan originator

National average salary: $283,220 per year

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