The job market in today’s world has unprecedented number of opportunities. While this may give an individual am ample amount of options to choose, sometimes it is confusing as well. And when you’re making a career choice, you have to keep certain things in mind while making such choice. This article is a comprehensive take on one of those opportunities in today’s world which is growing rapidly and is highly rewarding as well.
While looking through different career paths, you must have come across Real Estate Investment Trusts. If you want to know more about Real Estate Investment Trust, make sure to read this article to the end.
What is Real Estate Investment Trust?
Real Estate Investment Trust is a rapidly growing industry in the current time. According to a research of New York Times, the term ‘how to become a real estate agent’ was the most searched term from January 2020 to January 2021. A Real Estate Investment Trusts is basically a company or an agency which owns or operates income-generating properties.
The company may hold various commercial properties on the behalf of investors. These commercial properties can be apartment buildings, warehouses, shopping center’s etc.
If you are in the REIT sector, you can either be an agent or the head of any firm. You can help the investors to own real estate by investing in them. In this way, investors can earn revenues by investing in real estate without having to manage these properties. Mostly these REITs are publicly traded which allows the investors to buy and sell their share as if they have invested in a mutual fund. REITs distribute their income to their investors.
What is left in used to buy more properties or to invest in growing the company. REITs is a substantially growing industry. No matter what your initial career is, choosing REITs as a career will surely diversify your portfolio. If you have any interest in financial sector, REITs is a very good career choice to make.
Types of Real Estate Investment Trust:
These firms either own the entire property and manage themselves or in some cases they contract out some property to other firms. Usually, they pay almost all of their income to their shareholders. Their income is generated from the rent of the properties they own or they manage themselves.
These firms buy and operate mortgage on commercial properties. Almost 90% of their income goes to their shareholders. Their income is generated from the difference in interest rates that they borrow and then use to fund their loans.
These type of REITs manage certain properties but when it comes to outsource finance them, they use the equity and debt method. This helps them in reducing the taxes and gives them more opportunity to generate their income from rental properties. In the United States, most REITs use the hybrid method to own and manage properties. This hybrid form of investment usually focuses on real estate properties which can generate income for the investors.
These REITs buy and manage retail properties in business districts or areas with an upscale business. Generally, grocery stores or boutiques are set up once the place is leased out. These properties give back good returns to the investors because their value continues to increase over the period of time. The primary source of income in this trust in the rent that is charged from the tenants. Therefore, stores that are essential such as grocery should be set up because their sales won’t drop all of a sudden.
These REITs invest money in healthcare properties such as hospitals, nursing homes, surgical centres, living centres etc. These venues are ideal for long term growth. But, their income generation and growth is also dependant on the healthcare funding and the working and occupancy rate of these healthcare facilities.
These kind of REITs buy and manage rental properties. They operate in the manufactured housing schemes. Housing schemes promise good returns over a certain period of time. However, they come with own risks as well such as interest rate risk, housing market risk, financing risks. That is why these REITs prefer to operate in large urban areas where demand is large but the supply is short and limited, hence, they do not run into loss.
These REITs are usually termed as profit oriented and are termed as steady source of income because they do not come with many downsides. Places with office hubs are a safe bet to invest as man tenants sign long term leases. The return on these investments is correlated with factors such as unemployment, vacancy rate, state of economy.
Skills required in Real Estate Investment Trusts Industry:
While Real Estate Investment Trust might seem an easy career choice than others, it is not for everyone. Just like any other field, you need a certain set of skills to enter into this industry. It is interesting to know that most of the job opportunities in this industry are managerial and therefore, you have a lot of chance of move up the table if you play your cards right.
Certainly, these skills come in handy in day to day operations as well and bolster your experience as well. A few essential skills to brighten your prospects include:
- A professional understanding of Real Estate Business
- Basic understanding of Financial leads and statements
- Basic knowledge of different Financial Models
- Interest in the Finance sector
- Ability to do Market Research
- Knowledge of Asset and Property Management
- Good Marketing Skills
- Proficiency in written and Verbal communication
- Ability to sell and Customer Outreach
Job Opportunities in Real Estate Investment Trust:
Asset Manager is a mid-level management job which involves certain decision making. Part of their job is to decide which properties should be purchased and the amount of debt needed to finance a deal. Basically, they oversee all the operations related to property management and keep a check on the expenses as well.
Asset Managers are responsible for looking after the investor’s assets. They are also required to replace the assets which are down falling and replace them with better performing ones in order to give a higher return to the stakeholders. Asset Managers are expected to improve the financial performance of the REITs.
They also need to ensure REITs compliance with the regulations as this is a very complex task. Some of the REITs hire an executive level Asset Manager who supervises the performance of individual asset managers over a specified set of properties. To get a job as an Asset Manager, a Bachelor degree in Finance or Business is required. As mentioned earlier, this is a mid-level management job and higher education along with some amount of experience can even lead to a senior position as well. Average pay of this job is around 84,000$ per year.
Property Managers are directly involved in the buying and selling of the property. They oversee and handle property dealings and have certain marketing skills which help in customer dealings. It is a lucrative job for someone who has interest in Real Estate dealings. Most REITs work with third party Property Managers who oversee their day to day property operations and keep a look out for new Properties as well.
The day to day operations include supervising the lease agreements, enforcing compliance with lease provisions, collection of rent, dealing with evictions and maintenance of property and other numerous tasks related to real estate operations.
While some Property Managers are hired to deal with one specific property, most of them are responsible for multiple Property ventures in different portfolios. In this way, Property Managers acquire a great deal of experience in direct dealing and hence engage themselves in multiple REITs at one time. This multi-tasking approach is highly rewarding as well. At average, a Property Managers earns around 60,000$ per year.
Development Executives operate as a chief executive on the operational level in the Company. This job has lasting impacts on the financial operations of the company, therefore, the development executive must be thorough in his research on Market and Finance. It is his primary job to look for new Property ventures and development budgets.
They are required to identify new opportunities for Property Investment for further projects. Additionally, they are also responsible for overseeing and completing various projects which are underway. This job requires a lot of fieldwork as well. Development Executives work with contractors in financing their Company’s projects and developing their property. This job can either have managerial or non-managerial positions depending on the experience level. A development executive earns around 100,000$ per annum.
Acquisition Managers/ Analysts:
As the name suggests, an Acquisition Analyst is tasked with the job of identifying, locating and managing potential real estate properties which should be acquired. In order to do so, an Acquisition Analyst should have a good know-how of ongoing market trends to target specific real estate targets.
Once a property is located and acquired, Acquisition Managers are required to make agreements, negotiate price and help the client in this entire process. A good Acquisition Analyst should identify and acquire such Real Estate Properties which help in improving the Company’s Portfolio. Also, Acquisition Managers part of the job is to sell those properties as well which are not needed any more in the Company’s portfolio. This job usually requires a degree in business and experience in Real Estate dealings. This job can be started as an Intern and can lead to a Mid-management job in the company with a pay of around 120,000$ per year.
Investment Analysts job is to give financial advice in the REITs about the value of real estate properties and the financial factors which can have impacts on the property.
They are the financial analysts within a REITs who have a certain understanding on the market trends and regulations and speculate whether an investment should be made or not. Their job is to advise the top officials on purchasing property which is overall beneficial for the company.
They draft their proposal on the basis of cost benefit analysis and whether a certain investment will benefit the company from a financial perspective. To land a job as an Investment Analyst, an advanced degree in Finance or MBA is required. Average pay for an Investment Analyst is over 100,000$ a year.
Investor Relations Associate:
One of the main focus in a REITs is to build and strengthen relations with the investors for betterment of the Company. For this purpose, Investor Relations Associate are hired who handle the communications and company dealings with the shareholders and investors. They are required to keep the investors updated about Company’s ongoing operations and present an annual report to the investors.
They help in communications between Company and Investors. They must be proficient in communication and writing skills and should have basic financial expertise. To get a job as an Investor Relations Associate, a degree in Business, Finance or Public Relations is required. At average, an Investor Relations Associate earns 47,000$ per year.
Is Real Estate Investment Trusts a Good Career Path?
The answer is straightaway Yes. Real Estate Investment Trusts is a very good career choice once you get your feet settled and adjust yourself. The main thing about REIT being a great career is its flexibility. It does not matter what your initial career path is, as long as you have a passion about Finance and love working in Real Estate sector, you can have ample opportunities in this field.
One thing which makes REIT a reliable career path is its substantial growth over the years. And looking at the market trends, it is safe to assume that Real Estate sector is going to expand and grow more in the coming time. So, when the industry is booming, it will also create numerous work opportunities and one should choose this career without any further ado.
Like any other career, Real Estate Investment Trusts requires a certain amount of time and expertise if you want to exceed in the industry. It may be easy to enter into real estate but you should also keep it in mind that choosing Real Estate Investment Trusts won’t give you riches overnight. However, if you invest your time and skills wisely, you can excel to higher positions within the industry in a short time. In a nutshell, Real Estate Investment Trust is a promising career path and you will not regret choosing it as your career choice.