Setaras Monjil Case Study

Buying Real Estate Investment Trusts (REITs) is buying a Business

REITs invest the money that they have collected in real estate. However, it would be incorrect to assume that Real Estate Investment Trusts are nothing more than a vehicle for secondary investments in realty. In reality, investing in Real Estate Investment Trusts (REITs) is like investing in a business.
This means that if two Real Estate Investment Trusts are given the exact same amount of money, they will end up making very different returns based on how they are managed. In fact, if they are given the exact same properties to manage, the returns would still be pretty different! Hence, the returns provided by Real Estate Investment Trusts (REITs) depend more on their management expertise and style than other factors. Therefore, buying a share in Real Estate Investment Trusts (REITs) is equivalent to buying shares in a business.

Future

At the present moment, the short-term future of the Real Estate Investment Trusts (REITs) is considered to be negative. This is because the Fed is about to announce its QE tapering program. QE tapering is expected to hit all asset classes. However, one of the worst hit is going to be real estate. After all, real estate has been the source at which the entire crisis which led to QE and QE tapering started.

The Real Estate Investment Trusts (REITs) are therefore expected to see a period of turmoil in the forthcoming years. However, the long-term outlook on real estate seems good. Since Real Estate Investment Trusts are one of the best ways to invest in real estate the long-term outlook on REITs seems good by extension.