Is real estate investment trusts a good career path? Let’s find out. Are you looking for a high paid job and REIT is what comes to your mind first, but wonder if it is worth pursuing such a career? To help you decide whether a real estate investment career is the right choice, I have gathered professional insight from a few real estate experts to give you all the information you need before committing to changing jobs or following the studies for becoming a REIT.
Today`s job market is nothing like it was just several years ago. It offers opportunities to build a career and generate income that seemed entirely unattainable before. And Real Estate Investment Trusts (Or REITs, for sorts) are among the hottest topics in this field today.
But what may seem like the opportunity of a lifetime for some may, at the same time, look a bit sketchy for others. Let`s admit it: we all have a history of running across another scam or pyramid scheme when we were looking for a new job or a side hustle. That is why many people remain skeptical about the whole idea of real estate investment trusts and their perspectives.
Is real estate investment trusts a good career path? Let’s find out
So, what is REIT really? Is it another scam, a sketchy, overhyped trend from social media that will disappear into the fog in a year? Or maybe Real Estate Investment Trusts are a great career path and your chance to finally gain the financial independence and freedom you have dreamed of for so long? Let`s find out together.
What are Real Estate Investment Trusts, and are they legit?
No matter how many jobs markets, business communities, and societies change, real estate has been the keystone of the economy. Real Estate Investment Trusts are designed to let you build a career in the tangible and “eternal” world of Real Estate with the additional boost of financial analytics.
Imagine owning a piece of income-generating property, such as an office building, a hotel, a shopping center, and such, without having to actually buy it or deal with the overwhelming management and maintenance costs.
Real Estate Investment Trusts are a structure that does all that heavy lifting on behalf of investors. The idea of REITs is to give access to real estate investments to more people and use the funds they generate for more efficient management of profitable, large-scale estate pieces.
The work of Real Estate Investment Trusts can be compared to the operation of a stock market, but in this case, the process of trading is bound to the perfectly tangible world of real estate.
One of the most appealing arguments for a career in Real Estate Investment Trusts is the fact that REITs offer dividends. The Internal Revenue Services oblige Real Estate Investment Trusts to distribute at least 90% of their taxable income as dividends.
Moreover, Real Estate Investment Trusts are regulated by the Securities and Exchange Commission (SEC). This agency of the United States federal government was created as a response to the 1929 Wall Street crash and aimed to enforce the law against market manipulation.
So, if you are asking whether Real Estate Investment Trusts are legit, the answer is yes. As of now, REITs are as legit as it gets, which means that a career in Real Estate Investment Trusts is a realistic opportunity and not another pyramid scheme or a fleeting hype.
But before you start imagining yourself as a Real Estate market bigwig, let`s dive a bit deeper into the structure of REITs and see whether this promising career opportunity has some sort of dark underbelly.
Spoiler alert: it may…
How do REITs work, and where does the money come from?
While most people get distracted by the “Real Estate” part of a REIT`s definition, the keyword that explains how this system works is “Trust.” The fact that REITs are structured as Trusts means that they are legally obliged to distribute the lion`s share of their income among investors. Technically, we have already described this process and its regulatory mechanisms.
So, where does the money come from? Investors are those who purchase shares in either publicly traded or non-traded REITs. In a way, Real Estate Investment Trusts are a type of Crowdfunding that allows practically anyone to enter the lucrative Real Estate market.
However, there are two types of REITs, and it is essential to understand the difference between them:
- Public REITs are companies that are publicly traded on stock exchanges and registered with the SEC. The fact that they are public means that literally anyone can invest in them by buying shares and enjoying the dividends.
- Private REITs are a kind of “exclusive club” for real estate investors. Only a limited group of investors can buy shares in such Real Estate Investment Trusts. Usually, those are either so-called “institutional investors,” such as pension funds or endowments, or physical investors with high net worth. It is important to point out that Private REITs are not required to get SEC registration.
So, as we have already mentioned, Real Estate Investment Trusts are a kind of crowdfunding on the real estate market that allows you to buy, upgrade, and manage properties. The type of REIT determines the scale of the fund`s operation. Those can be anything from small hotels, apartment buildings, and shopping centres to enormous office buildings and malls.
At the same time, Real Estate Investment Trusts can also be divided into three types depending on how they generate income from those properties:
- Equity REITs: When talking about Real Estate Investment trusts, most people mean precisely Equity REITs. Those are technically landlords that own properties such as apartment buildings and malls and get their income from tenants who rent those residential or commercial spaces.
- Mortgage REITs: this type of Real Estate Investment Trust acts like a bank that can finance real estate owners or developers and make their income from the loan`s interest;
- Hybrid REITs are massive companies that both own properties and provide loans for those who want to purchase, build, upgrade, etc.
On the one hand, the idea of Real Estate Investment Trusts is pretty clear; the Government regulates these funds and therefore seem like a pretty legit opportunity, whether you want to generate income from investing in those Trusts or look for a career in one of those companies.
However, as solid as it seems to be, the Real Estate market tends to throw up surprises from time to time. Some of them affect the whole world and go down in history textbooks.
The dark side of REITs
Let`s talk about the risks of Real Estate Investment Trusts, a sort of dark underbelly many people don`t think about and anticipate.
High dividends and prospective careers.
- Management risks: the risk of human error and poor management decisions is one of the main threats to successful REIT investments. At the same time, it is the reason why Real Estate Investment Trusts are such a lucrative job market for Risk Management professionals.
- No control: shareholders are supposed to trust REITs entirely and can only hope that the decisions the management team makes will work out. The more professional estate managers Real Estate Investment Trust has on the team, the better.
- Unstable market: we all know how the Real Estate market can suddenly skyrocket or sink due to various reasons, from local events to global economic crises;
- Interest rate changes: when interest rates rise, people are more reluctant about buying real estate, which means that it loses its value, which in turn affects the value of REITs;
- Limited transparency: although REITs are perfectly legit, sometimes they still lack transparency, especially if we are talking about the private ones, which don`t have the same disclosure and reporting obligations as public REITs;
- Dependence: investors and their income entirely depend on the ability of a REIT to generate profit.
As you may have already understood, Real Estate Investment Trusts can only be successful if they have people with deep knowledge of the Real Estate market as well as finance management experts. Now let`s go over the main REIT jobs, their perspectives, and requirements to understand whether Real Estate Investment Trusts are worth the hype as career paths.
Jobs in Real Estate Investment Trusts
REITs create a sort of ecosystem where professionals from different fields work together. Some of those jobs require specific certifications and even academic degrees, while others are perfect entry-level opportunities that will help you start a successful career.
Here are some of the most prospective jobs in Real Estate Investment Trusts.
- A REIT analyst is a person who knows the ins and outs of the real estate investment market. They help investors make informed decisions about their next move and enable REITs to generate maximum profits.
- Financial Analyst: Their role is to make sure the Trust is fully functional and create financial models and strategies that will help REITs develop or get out of a crisis.
- Investor Relations Manager: they are a connecting link between the present shareholders as well as prospective investors and REIT`s financial analysts and managers to make sure everyone is fully informed and can resolve all the possible issues on time;
- Asset manager: this expert keeps an eye on the REIT`s performance to make sure it hits the investment goals;
- Acquisition Manager: When a REIT plans to purchase another property, this specialist estimates all the risks and benefits of this acquisition, helping Real Estate Investment Trusts grow steadily;
- Accountant: hardly any business can operate without an Accountant, and when it comes to REITs, an Accountant is one of the key figures who control all the trust`s financial movements.
However, not all careers in Real Estate Investment Trusts are focused on financial management and analytics. A successful Real Estate Investment Trust cannot exist without those who actually build and manage the properties:
- Property Manager: This position can contain a pretty broad list of duties, from making sure the elevator works in an apartment building to dealing with the maintenance of the whole shopping centre;
- Property developers‘ work starts before there is even a building to manage. A property developer will estimate which projects have the best potential to generate income in a particular area and give advice on the best opportunities for the REIT.
- Property Development Manager: When Real Estate Investment Trusts decide to invest in an apartment building or a commercial centre that is still under construction, the property development manager will make sure that everything goes according to plan.
- Real Estate Property Appraiser – this expert will determine how much the property is worth considering lots of factors from placement and current situation on the market to its history and construction peculiarities. Except for the deep knowledge of the local real estate market, this position requires specific appraisal certifications as well.
As you can see, there are lots of career opportunities in Real Estate Investment Trusts for people with different academic and professional backgrounds. And considering such trends as increasing urbanization and growing interest in investment opportunities, REITs seem to create a pretty good job market.
However, there are still reasons why you may think twice before starting your career at a Real Estate Investment Trust.
Why REIT is not a good career choice
Every career may have its challenges, and there are several flies in the honey bucket of Real Estate Investment Trusts.
Here are several things you need to know before looking for a job in a REIT:
- Extremely strict regulations: REITs have to comply with extremely strict regulations in every field, from property laws to taxation. It means that no matter which position in a Real Estate Investment Trust you choose, it will be vital to keep abreast and often deal with the stress of regular inspection and reporting.
- Complex structure: as a rule, a Real Estate Investment Trust does not own just one apartment building or commercial property. It is always a complex chain of properties, each with its own specific characteristics, requirements, and issues. It means that you may have to juggle elements of real estate law, finance, and taxation for different kinds of properties at once.
- Working your way up: Real Estate Investment Trusts often deal with very specific types of properties or require deep knowledge and particular skills from people who work in the field. It means that your previous background in business and financial analytics, sales, or real estate may be a tangible advantage, but it doesn’t instantly guarantee you a high-paid position in a REIT. Most likely, you will have to dedicate a couple of good years to working your way up the career ladder in a Real Estate Investment trust.
- Market fluctuations: the only thing that is guaranteed in the real estate market is that it will change entirely one day. Prices may suddenly crash after just one unfortunate event or skyrocket when you least expect it. That is why a job in real estate, and particularly in Real Estate Investment trusts, is not for those who seek predictability and cannot work under pressure.
So, is a job in Real Estate Investment trusts a good career path?
To understand your perspectives in the REIT job market, you should better assess whether this career path and its requirements suit you personally.
Real Estate Investment Trusts offer a professional ecosystem that combines real estate and financial management, making investment attractive and accessible for more people. It means that there are jobs in REITs for those who understand the real estate market and have good communicative skills, as well as those who are good with technical aspects of financial management, property legislation, and taxation.
It is a challenging career but, at the same time, a pretty rewarding one, with average annual salaries that range between $60,000 and $150,000.
Real Estate Investment Trust can exhaust its cash reserves, go down, and even go bankrupt at a certain point. But so can any business, whether you are working for an international company or a local start-up. Any way you look at it, a career in REITs can be a good decision, and it is mainly up to you how the job market for Real Estate Investment Trusts will turn out in your case.
Did you find this real estate investment guide helpful? Are you going to pursue a REIT career, or haven’t decided yet? I really hope that this informative guide helped you clear some important questions that you had about real estate, and if I did answer clearly what you wanted to know, please share this page on social media to help others understand better what it means to follow a career in real estate investment trusts.