Hybrid REITs
Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.

Retail REITs
Approximately 24% of REIT investments are in shopping malls and freestanding retail. This represents the single biggest investment by type in America. Whatever shopping center you frequent, it's likely owned by an REIT. When considering an investment in retail real estate, one first needs to examine the retail industry itself. Is it financially healthy at present and what is the outlook for the future?

It's important to remember that retail REITs make money from the rent they charge tenants. If retailers are experiencing cash flow problems due to poor sales, it's possible they could delay or even default on those monthly payments, eventually being forced into bankruptcy. At that point, a new tenant needs to be found, which is never easy. Therefore, it's crucial that you invest in REITs with the strongest anchor tenants possible. These include grocery and home improvement stores.

Once you've made your industry assessment, your focus should turn to the REITs themselves. Like any investment, it's important that they have good profits, strong balance sheets and as little debt as possible, especially the short-term kind. In a poor economy, retail REITs with significant cash positions will be presented with opportunities to buy good real estate at distressed prices. The best-run companies will take advantage of this.

Residential, Healthcare And Office REITs

Related Articles
  1. Investing

    5 Types of REITs and How to Invest in Them

    Real estate investment trusts are a sound addition to a diversified portfolio. Learn what you need to know to invest.
  2. Investing

    REITs As an Alternative to Real Estate Investment

    Does investing in real estate seem like too much maintenance? Consider the many advantages of REITs, or real estate investment trusts.
  3. Investing

    What To Expect From REITs In 2014

    While REITs will face a number of challenges in 2014, one particular issue will be the focus of investors: rising interest rates.
  4. Investing

    Are REITs Beneficial During A High-Interest Era?

    Amid expectations of high interest rates, do REITs offer a viable investment option? Investoepdia studies the historical data to decide.
  5. Investing

    How To Analyze Real Estate Investment Trusts

    REITs are much like dividend-paying companies, but analyzing them requires consideration of the accounting treatment of property.
  6. Investing

    3 Types Of REITs For Your Portfolio

    Learn the key features of three subcategories of equity REITs: industrial, multifamily and hotel REITs.
  7. Investing

    Retail Exposure Problematic for REIT ETFs

    Amazon could be a big problem for retail REITs and some related ETFs.
  8. Investing

    3 Cheap REIT ETFs That Stand Out (SCHH, FREL)

    Discover three low-cost exchange-traded funds that hold stocks of real estate investment trusts (REITs) and provide unique perspectives on the REIT industry.
  9. Investing

    At Look at REITS vs. Real Estate Mutual Funds (ESRT, TRREX)

    REITs and real estate mutual funds have their differences, but they both offer liquidity and easy access to diversified real estate assets.
Frequently Asked Questions
  1. Should I pay my mortgage with my credit card to earn credit card rewards?

    If you try, in order to earn cash back rewards, you'll discover that your options are extremely limited and are unlikely ...
  2. What's considered to be a good debt-to-income (DTI) ratio?

    Your debt-to-income ratio helps lenders determine your credit worthiness. Find out how to calculate your score and how to ...
  3. What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of ...
  4. What does a Chief Financial Officer (CFO) do?

    A CFO is responsible for accurate reporting of a company's financial information, investing the company's money and identifying ...
Trading Center