Page 26 - IreitEbook

Many investors make the mistake of buying into specific real estate investment trusts

because they like the literal look of the buildings they own and operate. Or perhaps

they know someone who works at one of those properties.

However, there’s a lot more to it than that.

On the one hand, if a REIT has a superior set of properties, a conservatively

leveraged balance sheet, and a management team with a proven track record of

prudently allocating capital, it’s likely going to be a good investment. That’s overall

accurate advice even if the REIT’s price per share isn’t “cheap” or deeply discounted.

On the other hand, it never hurts to know as much about where you’re putting

your money as possible…

It only makes sense that each real estate category would be associated

with distinct supply-and-demand fundamentals that, in turn, assign certain risks

and rewards to the landlords’ expected income. Although these risks and rewards

become most apparent during economic booms and busts, they constantly govern

the profitability of different property types and, by extension, affect stock-price

performance as well.

Understanding how, why, and when different kinds of REITs have traded in the

past can lead to more worthwhile predictions about how, why, and when they’ll act up

or down in the future.

So let’s get right to it.