Why Choose a REIT Career?

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Real estate investment and REIT careers could be the answer for financially savvy people looking for challenging job opportunities with excellent growth potential.

The exciting thing about real estate investment trusts is that you can pursue several career paths, including project development, property management, investor and public relations and many other appealing jobs.

In the following insightful guide to REITs and a REIT career, we examine factors to consider when determining whether working in a real estate investment trust is right for you. We discuss what REITs are and how they function, the benefits and drawbacks, the possible REIT sectors and options, requirements and salary prospects.

What Are REITs?

Real estate investment trusts are companies, or commercial real estate portfolios, that act as investment vehicles. They typically own, operate and finance the development of income-producing real estate, including land, buildings and more. REITs invest in various real estate, including free-standing residential properties, apartments, hotels, warehouses, office buildings and even cellular towers or advertising space.

Instead of individual investors injecting vast amounts of capital into purchasing, financing and managing properties themselves, they can buy stocks in publicly traded REITs and earn dividends, diversifying their portfolios while incurring less risk. It also means benefiting from the business model, where the REIT collects earnings, often rent, which the shareholders earn as dividends.

What Qualifies a Business as a REIT?

For a business to qualify as a REIT, it must adhere to the following Internal Revenue Code provisions provided by the IRS for real estate investment trusts. The fundamental qualifications are that the company must predominantly own real estate and distribute that income to shareholders. Other requirements a business must meet to be a REIT include:

• After existing for one year, it must have at least 100 shareholders.
• It must ensure that five or fewer people do not own more than 50% of its shares.
• A board of directors or trustees must manage it.
• It must be an entity that is taxable as a corporation.
•  75% of total asset investment must be real estate, cash or United States treasuries.
• 75% of gross income must come from rentals, the sale of real estate or interest on mortgages used to finance.
• 90% of taxable income must go to shareholders as dividends.

The 4 Different Types of REITs

The REIT industry has four predominant types of REITs.

1. Equity REITs: When most people in real estate investment speak about REITs, they mean equity REITs, which predominantly own income-producing real estate.
2. Mortgage REITs: Often referred to as mREITs, these indirectly own real estate as they lend money to real estate owners and developers to generate income on the interest earned.
3. Specialized REITs: These tend to focus on niche real estate types such as medical and health care, farmland, theaters, digital and telecommunications.
4. Hybrid REITs: These combine a mix of equity and mortgage REITs by owning real estate and holding mortgages.

You can also further classify REITs by how they buy and sell shares and the ease of share ownership.

• Publicly traded REITs: You will find these listed on a national security exchange and regulated by the Securities and Exchange Commission.
• Public non-listed REITs: These are publicly owned and required to register with the Securities and Exchange Commission but not traded on a national security exchange.
• Private REITs: These are exempt from SEC registration and do not trade on national stock exchanges.

REIT Historical Performance Suggests Positive Financial Future

When you start investigating available opportunities to invest your finances and future, you first need to look at their historical performance.

REITs have a long history of providing significant and reliable dividends to their investors. They have outperformed other investment options over roughly the past 20 years, including the S&P 500 Index, which REITs tend to beat by 3.6% during high inflation periods.

REITs also have a positive legislative track record, with innovations over the past 60 years that have strengthened and improved the investment opportunities that REITs offer millions of investors.

As the most recent example, the Tax Cuts and Jobs Act of 2017 reduced taxes on REIT dividends by 20% for individual investors with taxable incomes below $157,000 (or $315,000 for joint filers). Partial tax benefits are also available on REIT dividends to individual investors with taxable incomes of up to $207,000 ($415,000 for joint filers).

The combined upward trajectory of solid REIT dividends and positive legislation activity are significant signs that REITs will continue providing financial stability for their investors. This trend bodes well for those considering a REIT career, as it means potential job security for the foreseeable future, based on past and current financial performance.

REITs vs. Direct Property Investing

One debate real estate investors face is whether to put their money into a REIT or invest directly in the market by purchasing real estate. REITs and direct property investing come with various benefits and drawbacks worth considering.

The stability of REITs is a turnoff for some investors excited by the unexpected real estate boom of 2020, which, though it peaked in 2023, should still continue growing by 4.7% annually between now and 2028. Looking at the S&P/Case-Shiller Home Price Indexes as of April 2021, that meteoric rise is still sharply ascending. According to the latest non-seasonally adjusted national index, home prices saw a 2.6% year-over-year increase.

That’s quite a draw to go into direct property investment. Direct real estate investing puts full control of all property sales, purchases and rental agreements and all direct rental and property sale profits solely in your hands.

It also puts exclusive responsibility on you, too. You’ll need to secure funding for every property purchase. If you choose to invest in rental properties, you’ll need to find and vet all tenants, collect the rent and maintain the properties, or pay a property management company to handle these details.

Here are some of the benefits of REITs.

• Liquidity: REITs have better liquidity than direct property investment because shares trade on the stock exchange, unlike property, which takes time to buy and sell on the open market.
• Transparency: REITs publicly traded on the stock exchange must register with the SEC and disclose financial information to their investors.
• Diversification: REITs invest in a massive portfolio of properties that minimize the financial hit when disaster strikes, such as an anchor store pulling out of a retail property, which has serious ramifications for other stores and investors. REITs can also afford to employ economic experts to anticipate and mitigate damage from financial crises such as the 2008 crash by diversifying property holdings in advance.
• Dividends: REITs offer investors some of the highest dividends around, as regulations require REITs to distribute 90% of all taxable income among the shareholders as dividends.

REIT investing has potential drawbacks to weigh.

• Lack of control: You have little to no say over what happens to your money once you invest it in a REIT. You only have control over putting money in and taking it out.
• Investment risk: REITs are lower risk than direct property investing but not risk-free. While REITs have a history of growth, they can lose value as interest rates rise, putting your overall investment at risk.
• Lack of arm‘s-length transactions: Major players in the REIT world have crowded out the small investors in recent years, which has put a handful of REIT managers in the decision-making seat for multiple trusts. Some of these managers conduct transactions between REITs they control, which removes the arm’s-length transaction aspect that guarantees their investors a fair sales or purchase price.
• Management fees: REITs don’t run themselves. They require management that their investors pay for out of their profits and investments. Before investing, you need to research your REIT management fees so you don’t end up paying too much.

5 REIT Sectors to Consider

While specialty REITs focus on specialized real estate and hybrid REITs invest in multiple sectors simultaneously, most stick to one market sector. Each sector has risks and rewards, so it’s crucial to investigate before selecting a REIT for your investment.

1. Retail REITs: This kind invests in properties that house retail stores, including shopping centers, regional malls and outlet centers.
2. Lodging/resort REITs: These REITs invest in hotels, motels and vacation resorts and rely heavily on tourism.
3. Health care REITs: This REIT sector invests in various health care-related real estate, including hospitals, nursing homes and health clinics.
4. Industrial REITs: These invest in industrial facilities, including distribution centers, warehouses and pharmaceutical labs. As industrial property is often essential to various industries, it is usually more resistant to economic downturns.
5. Income-producing land REITs: Falling under the umbrella of specialty REITs, these REITs make money from goods produced on the land, such as farmland REITs and timber REITs, which can make solid investments.

Considering a Career With a REIT?

Directly investing your savings into a REIT isn’t the only way to profit from these types of companies — you can also build a sizable and secure financial future by working for a REIT.

Remember those management fees you’ll pay out as a REIT investor? Depending on the structure of the REIT you choose to work for, as a REIT fund manager, you may be on the company’s payroll, or you might earn a base salary and receive a percentage of the total trust assets as part of your compensation.

Working with an investment firm will sometimes let you learn more about the real estate industry, as you can network with investors, qualify investment deals and work to grow the investment portfolio by finding properties for the REIT to invest in.

REITs are another tool investors can use to diversify their investment portfolio or get into the industry. You can take many paths when investing your savings and future in a REIT career.

Acquisitions

If you’re an acquisition analyst, you’re on the team sourcing new investment opportunities and taking a deal to the finish line. Since it is a relatively finance-heavy role, you must have a degree or background in capital markets, finance, marketing or general business. Analysts at the beginning of their careers usually earn around $91,938 annually.

Development

This team is responsible for initial construction development or large-scale renovation projects. This project management-heavy function works with other departments to finance the property development while liaising with other contractors to realize new property development, expansion of existing real estate or even repurposing property for additional revenue opportunities.

To get into development, you should have qualifications in the building and construction industry. For project management, you will require further formal or on-site training. Though salaries vary significantly, you could earn approximately $107,124 per year as a project developer.

Property Management

Property managers oversee all day-to-day aspects of the property’s operations, from leasing to maintenance to collections and everything in between. To earn a role in project management, you must know various property-related elements such as repairs, property inspections, marketing and tenant relations.

Because of this, one form of educational background may help you, though you’ll need to understand other aspects. The best way to get into property management is to work in a similar field, such as being a real estate agent. As a property manager, you could earn around $58,297.

Asset Management

The asset management team for REITs is multidimensional. It often comprises several team members, including the REIT’s senior leadership group and asset managers, portfolio managers, acquisitions and financial and REIT analysts. The responsibility is to effectively manage and enhance the value of assets while mitigating risk and maximizing returns for shareholders.

To work in REIT asset management, you typically need at least 10 years of experience in asset management or a related field. Degrees and areas related to asset management include financial analysis, investment analysis, statistics, mathematics and economics or accounting. A role like this will net you upward of $97,578 yearly.

REIT Analyst

While property managers oversee the general operations of the real estate properties and asset managers ensure operational financial performance, there is another essential role to fill. The REIT analyst is responsible for analyzing and evaluating the overall performance of existing components.

They will examine the health of current investments, the general market trends and the REIT’s financial performance. Their work allows the directors to make informed decisions regarding risks, potential improvements and future investments. You can expect to earn an average annual salary of $76,795 as a REIT analyst.

Investor Relations

If you want a career in investor relations, you will be responsible for managing and implementing effective communications between the REIT and investors. Tasks include corresponding with analysts, your financial teams and other team members to formulate concise documentation for the annual meetings, reports and statements in line with SEC requirements and regulations.

This career requires a sound understanding of finances, management and public relations. Working in investor relations, you could earn in the range of $117,419 per year.

Real Estate Investment Industry Careers With New Western

If your goal is to learn more about the real estate industry from the inside out, working with an investment firm could be a good option, but it may require much more experience than you currently have. Before committing to a REIT, you should consider alternatives.

New Western hires motivated people looking to start their careers. We are consistently looking for driven, passionate and hardworking team members from all over the nation. We are firm believers in growing and promoting internally, which allows our agents to progress through the organization, all the way to management roles, as they learn more about the industry and build skills.

When you join a company that’s changing the game of real estate investing, opportunity follows. We’re experiencing unprecedented growth and need more motivated people to help us improve our communities one neighborhood at a time. We have a track record of promoting from within, and our agents often make higher earnings through our commission structures than those following a career in traditional real estate brokerages. At New Western, you’ll find hard work never goes unnoticed or unrewarded.

Get in Touch With New Western Today for Careers and Investment

Deciding to start a REIT career is a big decision. Depending on your chosen career path, it could take years to reach your desired position. However, the competitive REIT industry can also be highly rewarding and offer growth opportunities.

Alternatively, if a REIT career isn’t right for you, consider a career in real estate investment with New Western. To learn more about who we are and what we do, check out our careers page and read the stories of agents who launched real estate careers with us.

If you are an investor looking for a reputable and reliable real estate investment marketplace, either to expand your property ownership or to sell an investment property, choose New Western, where we buy and sell property every 13 minutes. To get started, you can contact us online or call one of our numerous locations around the U.S. to ask any clarifying questions and begin your property investment journey today.