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What Every New REIT Investor Needs To Know



  • Every new investor makes mistakes. Unfortunately, with REITs, these mistakes are often particularly expensive.
  • Today, I allow you to learn some of my most valuable lessons from 10 years investing in REITs.
  • Most importantly, you should focus on management quality and target defensive, equity REITs in today's late cycle economy.
  • I do much more than just articles at High Yield Landlord: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

REITs are some of American’s favorite investments. In fact, they are so popular that more than 87 million Americans invest in REITs. This is really no wonder when you consider that:

  • REITs have generated 14% annual returns over the past 20 years – compared to “just” 8% for the S&P 500 (SPY).
  • REITs pay 2-3x more income than regular stocks.
  • And they offer valuable diversification benefits to a portfolio.

Unfortunately, new investors often underestimate the difficulty of investing in REITs and end up making poor investment decisions.

The business model itself is rather simple to understand. REITs own properties. These properties generate rents that are paid by tenants. And these rents are then passed to the shareholders in the form of dividends.


However, what complicates this seemingly simple business plan is the fact that REITs own $100s of millions, if not billions, worth of properties - ranging from apartment communities to malls, office buildings, warehouses, and anything else imaginable. Moreover, balance sheets vary greatly from one REIT to the next and management teams are often poorly aligned with shareholders.

I have been investing in REITs for more than 10 years. Early on, I made many mistakes, which could have been avoided with better education. Today, I allow you to learn from my mistakes so that you don't have to reproduce them in the future.

Management Quality is No. 1

There are a lot of seemingly discounted REITs out there that pay high dividend yields and offer enormous upside, according to some observers.

Some of them may be good opportunities, but most often, the discounted valuation is the result of poor management alignment.

And believe me when I say that it's never a good trade off to get high yield in exchange of poor management. Earning a big yield is

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We are so confident in what we offer that we allow you to join us and decide within your free trial whether this service is something for you or not. You will get instant access to our Course to REIT investing, our 3 Portfolios, Top rated investments, Tracking tools, and much more.

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This article was written by

Jussi Askola profile picture
Become a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.

Jussi Askola is a former private equity real estate investor with experience working for a +$250 million investment firm in Dallas, Texas; and performing property acquisition in Germany. Today, he is the author of "High Yield Landlord” - the #1 ranked real estate service on Seeking Alpha. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. Click here to learn more! 

Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. In addition to having passed all CFA exams, Jussi holds a BSc in Real Estate Finance from University Nürtingen-Geislingen (Germany) and a BSc in Property Management from University of South Wales (UK). He has authored award-winning academic papers on REIT investing, been featured on numerous financial media outlets, has over 50,000 followers on SeekingAlpha, and built relationships with many top REIT executives.

DISCLAIMER: Jussi Askola is not a Registered Investment Advisor or Financial Planner. The information in his articles and his comments on SeekingAlpha.com or elsewhere is provided for information purposes only. Do your own research or seek the advice of a qualified professional. You are responsible for your own investment decisions. High Yield Landlord is managed by Leonberg Capital.

Analyst’s Disclosure: I am/we are long EPR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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