These past three almost four years, I’ve been investing in REITS (Real Estate Investment Trusts) and so far I’m been very happy with them, and here’s why…
I’ve almost recaptured my principal that I invested in the REITs! If all goes well, sometime in the 2 years, I’m have doubled my money! Now if you look at my investment in the REITs, it’s not impressive… For example, the $10,000 I have invested in my largest REIT position and it’s stock value is only up to $10,044 not very impressive huh, but after you factor in the dividend stream that I also received, my gain is really almost 75% of my initial $10,000 purchase price! About a 175% in 3.5 year, not too shabby huh! I guess that’s what a near 20% dividend can do for you over a few years span of time!
While I’m not really bragging, it has been nice! Most people (including myself) thought that I was gambling, and to a certain extent, they were right. If the Fed (Mr. Ben Bernanke) decided to raise interest rates, I would have possible been hurting, at least a bit… But based on the economy and more importantly the world economy, I found that scenario unlikely!
If Mr. Ben Bernanke (aka the Fed) keeps rates flat, I don’t see why I wouldn’t be able to double my money allowing me to recoup my initial investment dollars. At that point, I might just let it stay invested in the REIT since it’s now considered the “the house’s money” (a gambling saying that means I’m playing with the casino’s money since I have all of my principle back). Since I doubt that the REITs that I’m invested in will go to zero, I’ll just let them ride and not worry about it.
Now the big question is “Would I invest in REITs today?”. And my answer would be it depends, but maybe for the next 1/2 year to 1 year. It really depends on the Fed (Mr. Bernanke) and what they are planning to do with the interest rates. As long as REITS can afford to pay out a decent dividend, it seems like a decent, although much more risky gamble.
While I consider the dividend income from the REIT’s that I’m in a victory, I’m not recommend the same approach as a strategy today…
Disclosure: I have REITs and I’m currently long on them!