Are you considering working in the financial sector or real estate? Perhaps, you have heard of a combination of the two and are asking yourself, “Is Real Estate Investment Trusts a good career path?” Let’s find out.
Real Estate Investment Trusts (REITs) have grown substantially and productively for decades, with over 1 trillion US dollars in market capitalization to date.
While Real Estate Investment Trust jobs in this sector offer promising opportunities and high compensation, knowing the pros and cons of working in REITs is still important for any job seeker.
Read on to understand this sector and the professional road you will take if you decide on a REIT career.
What Exactly Is a Real Estate Investment Trust (REIT)?
A real estate investment trust or REIT refers to an agency or company that owns, manages, and finances multiple income-generating real estate projects. If such agencies invest in government real estate projects, they enjoy special tax relaxations and incentives.
Shareholders of the company are the decision-makers who decide on their preferred field of investment. They consider several factors. For instance, is the field in question suitable for investing? Will it return a high yield? Will the shareholders and the company earn money?
These questions are important because, in this field, nothing is risk-free; it might be a low-risk investment but never risk-free, especially when it comes to the real estate market.
On top of that, the company has numerous options to invest in, such as hotels, schools, hospitals, etc.
REITs acquire properties by buying them. After that, they can keep and manage it as a rental property or sell it off to generate outright income. Investors can earn dividends from the real estate project if they choose to own and operate the property.
How Many Types of REITs Are There?
Since the company can invest in various possible ventures or property types, it’s better to stick to one field rather than be a jack of all trades. This is because each investment opportunity has its own parameters.
For example, a school and a hospital have different aspects that need to be considered. Disregarding these differences is like making a jam out of apples and oranges and expecting them to taste the same.
So, let’s go over the different types of real estate investment trusts out there, shall we?
Equity Real Estate Investment Trusts
Equity REITs own the physical or commercial property, taking the traditional way of doing things. The agency owns the investment property, invests in it, and coordinates everything. That includes the management of the property and the finances, which are all handled by the stockholders.
Another aspect of an equity REIT is that the company must distribute 90% of its income as shareholders’ dividends.
Mortgage Real Estate Investment Trusts
Unlike equity REITs, mortgage REITs don’t own any physical commercial properties. They invest, purchase and manage mortgage assets.
There is no real estate property management; only the finances need to be managed.
Hybrid Real Estate Investments Trusts
As the name implies, hybrid REITs are a mix of equity and mortgage REITs.
Agencies like these own the physical property and manage it, but the finances are outsourced to another company.
Residential Real Estate Investment Trusts
Residential REITs are among the most beneficial real estate investment trusts currently in the market. That’s because of the amount of ROI (return on investment) these trusts generally get over time.
Rental properties are the main focus of this agency; they rent out properties they own to generate rental income.
Retail Real Estate Investment Trusts
To put it simply, retail REITs own retail properties, manage them and then rent or lease them out to people or companies looking to start a new business or expand their existing one.
Dealing with commercial real estate holdings is a good way for the company to generate income; the same goes for investors.
Because retail property generally increases in value over time, it means more rental income for the company and more investment returns for the investors.
Office Real Estate Investment Trusts
Mainly investing in office buildings, these real estate investment trusts own, operate, and manage the properties. These investment properties are rented out to companies, agencies, and corporations looking to establish or expand their office network.
Office REITs are one of the most significant ways to ensure multiple stable cash flows in the long run; many investors take full advantage of that.
Health Care Real Estate Investment Trusts
As the name implies, healthcare real estate investment trusts invest in properties related to the medical field–from hospitals to assisted living to rehab centers.
As the medical field is crucial, and it’s unthinkable to imagine a society without proper working health care, there will always be a need for such properties.
Real Estate Investment Trusts and the Jobs They Offer
If you’re still curious about real estate and questioning whether working in real estate investment trusts is a good career path, this section will help you.
Below you’ll find a list of the best-paying jobs in this field and approximately how much they make per year.
1. Property Manager: $45K–$58K per Year
Becoming a property manager is a perfect way to set foot in the world of real estate. Their job description is to manage all the properties owned by the agency and look for new investment opportunities for the REIT.
The job primarily consists of fieldwork, so dealing with customers and looking over the operation of the whole project you’ve been assigned is also part of the job.
You’ll gain a lot of experience about how the gears turn in this field, and with that, you could move up the ladder, become a real estate investor, and improve your net worth.
2. Development: $100K per Year
The most integral part of a real estate investment trust is its development executives. This position is not something you can easily start with since this is an executive role that requires years of experience. That’s why you’re getting a six-figure salary.
In charge of providing the funding for the development process, a development executive needs to keenly understand the market, materials, and operations and how to lead the process. They directly deal with contractors and sub-contractors and determine the investment strategy for each project and client.
The job also includes handling turnkey projects, in which you develop and provide clients with fully-operational real estate properties.
3. Asset Management: $49K per Year
An asset manager’s job is to deal with clients, guide them toward better investment opportunities, and offer them deals if the situation calls for it.
For this job, you’ll need to be knowledgeable about the real estate industry and manage your clients’ rental properties and estate portfolios.
You will also need knowledge and skills in investment management since you will be guiding real estate investors on the investment process, investing in appreciating assets, and ways to make money.
The reports you come up with will form a foundation for the next purchase. It will showcase the investment required and how much-expected ROI it will generate. Risk-and-return is the name of the game.
4. Acquisition: $52K–$69K per Year
The main goal for an acquisitions analyst is to look for promising investment opportunities for the REIT. In-depth knowledge of the market trends is required to do this job properly.
Analyzing the ongoing projects and their growth and gathering more investment based on that is also part of the package.
Why You Should Work in a REIT?
Working in a real estate investment trust has its own advantages. Let’s see what they can offer and why it could work out for you:
- Flexible work timings
- REIT share is highly liquid
- You’ll learn how to invest in real estate
Starting Your Own REIT
What if you don’t want to work for a REIT and want to start your own real estate investment trust? What aspects would you need to monitor? Is it a good idea to start your own real estate investment trust? You’ll find all the answers down below.
First, you need to understand that different investment trusts deal with different types of properties. Figuring out which one you want to start is the first step.
|Hospitals, Rehab centers
|Homes, Apartment buildings
IRC (US Internal Revenue Code) has provisions in place for companies that want to register themselves as real estate investment trust. You will need to follow and meet those requirements. Some of the terms and conditions are listed here:
- 75% of the total income generated must be invested in real estate
- 75% of the total income should be generated by real estate
- Must have a board of directors as the managing body
- The investors must be given 90% of the taxable income generated by the REIT as dividends
- A total of 5 or less than 5 individuals can hold only 50% of the total shares
- A total of 100 shareholders must be part of the company after the first year
Is Real Estate Investment Trust a Good Career Path?
To conclude this article, let’s answer this question to settle it once and for all.
According to the latest trends, REITs are a very good option, whether working for one as an employee, as a third party, or even starting your own. The salaries offered by real estate investment trusts are high. The field is vast, with lots of opportunities for your choosing. You can always select one and switch if you think it isn’t the right field for you.
Working for a REIT will help you gain experience in the market, understand real estate trends, and learn about what to do and what not to do. This job will help you in the long run as all experience is valuable and help you make greater decisions to further your career growth.
You can choose from multiple jobs. Even the basic ones offer learning experiences you can use to climb the hierarchy if you wish. Move from the fieldwork and into a managerial position. Make some calculated investments along the way that you think will return a high yield.
Think of it as a passive investment for the long run.
Frequently Asked Questions – Real Estate Investment Trusts a Good Career Path
Is Real Estate Investment Trust a Good Career Path?
Since the 1960s, real estate investment trust has been a successful field worldwide, offering profitable career opportunities to qualified individuals. You won’t get a fixed income aside from the base salary since the sector provides more: cash incentive compensation, equity incentive compensation, and perquisites or fringe benefits for executives.
Lateral career moves on various REIT jobs bring learning experiences that will help you climb the professional hierarchy or even establish your own REIT agency in the future.
How Safe Are REITs?
REITs are, generally, not considered particularly risky. This is especially so if their holdings are diversified. Thus, working in such a relatively safe sector can be equated to job stability for those seeking a career in REITs.
Conclusion – Is Real Estate Investment Trusts a Good Career Path
As a REIT professional, you can earn an impressive income while developing or managing properties.
If you are interested in real estate and the financial sector, you already have a leg up, as an investment in real estate has always been popular with those who want to start investing and earn a good passive income.
However, it can only be your ideal job and a great career path if your skillset and professional goals sync with the sector’s requirements. Continue weighing your options by doing smart research.
Founder of Spark Nomad, Radical FIRE, Journalist
Expertise: Personal finance and travel content
Education: Bachelor of Economics at Radboud University, Master in Finance at Radboud University, Minor in Economics at Chapman University.
Over 200 articles, essays, and short stories published across the web.
Experience: Marjolein Dilven is a journalist and founder of Spark Nomad, a travel platform, and Radical FIRE, a personal finance platform. Marjolein has a finance and economics background with a master’s in Finance. She has quit her job to travel the world, documenting her travels on Spark Nomad to help people plan their travels. Marjolein Dilven has written for publications like MSN, Associated Press, CNBC, Town News syndicate, and more.