The Problem With REIT’s – Real Estate Investment Trusts

Kris Krohn here with Limitless TV and
today, this video is dedicated to Will who sent in a video asking questions
about REITs, what are they and are they good viable real estate investment
options. Will, thank you so much for submitting
this question. Before I answer it, I just want to talk about what a REIT is, it
stands for a Real Estate Investment Trust and what it is is it’s usually a
group of investors that are using the stock market or through some kind of
publicly traded vehicle or even sometimes private to collect all of
people’s different money and then what they’ll do is, they’ll make choices on
how to invest that. Now there’s a certain percentage of money that you get, there’s
a certain percentage of money that they get and so the REIT is kind of like the
stock market, it can have dividends, it is real estate based and so your question
is, is that a good middle ground? For me, it’s an absolutely no way middle ground
and the reason why is, let’s say that I did have $40,000 or $50,000,
I could either put it into a piece of property that I own, I control, that cash
flows for me and with equity for me, with growth for me or I could put it in the
REIT and unfortunately, these REITs often pay out really small dividends and the
people that are running them actually have the ability to take some really
healthy generous portions and so instead of brokering your money, claim your money.
Do you understand the difference there? There’s brokering your money, there’s
claiming your money. Same thing like giving your money to the
stock market, that can be done really intelligently and there’s some really
great ways of doing it but real estate, there are so many juicy profits for you
to earn. Now when might I consider a REIT? Will, sometimes a REIT will allow you to
put in a really small financial investment maybe two or four thousand
dollars and even though I can show you ways of doing real estate with very
small amounts of money, that might seem like a really convenient way to get
involved, I would look at their compensation structure, I would look at
what they’re investing in and I would look at their historic payouts. Historic
payouts means how much have they been paying out quarterly or annually over
the last few years and then compared to some of the things that I’m claiming are
available to you in these different YouTube videos and then really find out
what is the arbitrage between them, what’s the Delta, what’s the difference.
You might find that if you’re making way more money investing on your own, that
might be why I’m not recommending the REIT. If however the REIT has a great
historical performance and they’re actually paying out really well and
they’ve got great long-term track record, well, if it’s a small margin of
difference then you may want to actually invest your money that way.
So look into it, in my experience, there’s a really significant
gap between what they’re offering and what you can get on your own, if that’s
true with the options you’re looking into then I probably forego the REIT and
just do your own properties. If you’ve got questions like Will, then go ahead
and submit a video with the instructions below and we’ll create a video answering
your questions for you as well.

20 Replies to “The Problem With REIT’s – Real Estate Investment Trusts

  1. hi there..thanks again for another great informative video…you should make a video in the future about the new tax reforms how they will affect new investors..

  2. hi kris, is there a way to view your 3 day seminar or wealth intensive online? i live abroad and getting there in person its really hard and expensive, i dont know if you do livestream or something like that. thank you. i would like to go to both, the 3 day breakthrough and wealth intensive, but the dates are far apart.

  3. Hey, I just turned 20 and want to start real estate investing. Seeing through all your videos that it works with such a small amount of money is amazing.I live in Victoria, B.C., Canada, and the average family home is now over $900k. Do you know about how your strategies may work in Canada ,or in a such expensive city?


  4. Interesting take on REIT. I’ve always said it’s a great opportunity to get into the real estate market without actually owning prosperity! Similar to mutual funds where you invest, however you’re trusting the fund manager to make decisions with the money you invested ! It’s a great “hands-off” way of investing into real estate !

    I, however, agree that there are some JUICY profits to get from real estate investing which makes returns from REIT look sad !!

  5. I’m on the other hand selling my rental property and planning to invest in REIT. I’m sick and tired of tenants calling at night about toilet clogged, roof leak ,or someone broke the window… too much headache to have 6-10% return

  6. Everything I've seen absolutely contradicts your claims…ESPECIALLY on dividends…I will say tho, if I had to choose between 50k in a reit or 50k for a property, I'm taking the property

  7. Well, in Indonesia most of REITs pays great dividend (better than most of common stocks) and traded highly undervalue.

  8. Reading the comments… people, don't trust youtubers, specially snake oil sellers. There's REITs with solid dividend returns and very low expense ratios.

Leave a Reply

Your email address will not be published. Required fields are marked *