With interest rates at record low levels and economic indicators suggesting a looming slowdown and uncertainty, downplaying the risk of an impending interest rate hike (atleast for a little while), REIT,s providing attractive yields would continue their hot streak in 2013.
But, investors have to beware of the honey trap REIT,s which boast of yields which seem too good to be true.
Some Real Estate Funds in the garb of high yields give back the investors their original capital invested, thus artificially inflating their giveaways and depleting your capital invested with the fund.
This would increase your capital gain, in case of a price appreciation or decrease your capital loss in case of a price decline, when investor would eventually sell the fund.
Another important characteristic to note before investing in a REIT should be its underlying assets, which are its money spinners. As an infertile Hen shouldn't be expected to hatch eggs, same way it would be extremely foolhardy for any rational investor to expect a fund with impoverished underlying properties to beget any significant windfall.
I will come back with some good REIT options to invest in my future posts, till then happy investing and good luck at the markets.......
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.