According to a recent Gallup report, 87% of millennials say that professional growth and career development are very important. So, is real estate investment trusts a good career path in 2023? Millennial or not, you’re certainly invested in your professional future. If you’ve been looking for a finance or real estate job, you’ve probably heard about companies called REITs.
REITs are a special kind of investment trusts – instead of stocks, bonds, and other assets, these publicly traded companies buy and sell (or own and lease) real estate. They provide commercial properties to businesses across industries and sectors, particularly hospitality, healthcare, and manufacturing.
However, that doesn’t answer your question – is real estate investment trusts a good career path in 2022? Let’s talk more about what REITs are, how they work, and what kind of jobs you can expect to find in this unique field. We’ll also discuss the job requirements, plus the pros and cons of working for a REIT.
What is a real estate investment trust?
A real estate investment fund, or REIT for short, is a publicly-traded company that gives you an opportunity to invest in commercial real estate. Most REITs own and manage commercial real estate that they also lease to other businesses for profit. As a rule, REITs must give their investors at least 90% of net earnings as dividends.
REITs generate profit for themselves and their investors either by leasing their properties or selling their real estate for capital gains. In addition to giving most of their profit to investors, REITs must also reinvest the remaining earnings into buying new properties or improving their trust in some other way.
Several other requirements decide whether or not a company can operate as a REIT. For example, real estate investment trusts must have a board of directors as a regulatory body. Another condition for REITs is that they must make at least 75% of their net earnings from leasing or selling their real estate.
Types of real estate investment funds
To make things slightly more complicated, there are three types of real estate investment funds. Equity, mortgage, and hybrid REITs all look alike, with some crucial differences – they don’t trade the same type of real estate assets, have different responsibilities, and make profits differently.
1. Equity REIT
When we talk about real estate investment trusts, we mostly mean equity REITs. They make money by buying and leasing or owning and selling commercial properties, giving at least 90% of their profit to investors. An equity REIT can manage its properties independently or outsource them to another firm.
2. Mortgage REIT
A mortgage REIT doesn’t lease or sell commercial properties at all. Instead, this type of investment trust buys and owns mortgages on real estate. Like equity REITs, mortgage REITs also give 90–100% of their net earnings to investors. Unlike equity REITs, they don’t hold properties, so they have nothing to manage.
3. Hybrid REIT
As their name suggests, hybrid REITs are a combination of the other two types of real estate investment trusts. They can own commercial properties and invest in mortgage loans at the same time. As a result, investors in hybrid REITs get dividends that come from both rental income and REIT’s capital gains.`
Who invests in real estate funds?
It’s no secret that successful REITs create exciting investment opportunities, but who invests in real estate funds? According to recent research, nearly 45% of American households are invested in REIT stocks. Bank trusts, insurance companies, endowments, and pension funds are also common investors.
Unless you have some experience with real estate investment trusts, it’s hardly unlikely that you would recognize even the most successful REITs by name, brand, or logo. While most REITs are owners of large apartment communities and office buildings, the most profitable ones own data centers and hospitals.
The largest REITs span high-in-demand industries such as healthcare, leasing real estate to private practices, senior housing, medical research centers, and specialty clinics. The leaders of healthcare-focused REITs in 2022 are Sabra Health Care (SBRA), Ventas (VTR), and Welltower (WELL).
In 2022, other profitable REITs were involved in tech, hospitality and entertainment, and the industrial sector. Some of the biggest names in the field include Claros Mortgage Trust (CMTG), Digital Realty Trust (DLR), Rayonier (RYN), Stag Industrial (STAG), Vici Properties (VICI), and Vornado Realty Trust (VNO).
Types of jobs in REITs
There are many attractive job positions in real estate investment trusts. While there is a professional hierarchy you can climb, the most notable characteristic of this field of work is the great diversity of roles. They range from asset managers and real estate attorneys to property developers.
In terms of expertise, REIT jobs can be grouped into two main categories – finance and real estate. On the one hand, REITs need accountants and tax specialists to help them manage the financial aspect of real estate investments. On the other, they need real estate appraisers, analysts, agents, and attorneys.
Managers who oversee properties, assets, portfolios, and real estate development are of special significance for the healthy functioning of these trusts. Although demanding, managerial roles in real estate investment trusts are typically entry-level and mid-level positions with a decent annual salary.
Once you’ve finished this article, learn more about the best paying jobs in real estate investment trusts.
The most popular types of jobs in REITs include:
● Portfolio Managers
Portfolio and asset managers are both mid-level management positions responsible for similar tasks and operations in a REIT. A portfolio manager’s most important duty is determining how individual properties fit within a REIT’s budget and overall strategy and allocating assets and resources accordingly.
● Property Managers
In most REITs, this is an entry-level, third-party position responsible for identifying new properties and ensuring existing ones operate without any bottlenecks. Property managers handle the people aspect of the REIT business and manage the many people involved in properties’ day-to-day operations.
● Property Developers
Qualified property developers are vital for the success of real estate investment trusts. They are responsible for the strategic planning and development of new properties, as well as supervising ongoing real estate development. The best property developers get promoted to executive positions.
● Acquisition Specialists
Acquisition specialists and analysts identify new acquisition opportunities and coordinate the purchase process. As an acquisition specialist, you are expected to maintain good client relations, negotiate the price, and prepare and manage purchase agreements on the REIT’s behalf.
How it all works
The basics of real estate investment trusts seem simple, and most REITs have a straightforward business model. They buy an existing property or real estate in development or develop their own real estate and then lease that space to businesses, collect rent, and distribute their income as dividends.
However, since real estate is a valuable asset, and since many parties are involved in the REIT’s daily operations, real estate investment funds rely on a wide range of experts to keep them financially healthy and compliant. These are finance and real estate experts, but also salespeople and marketers.
How does it all work? It all starts at the upper level, where property developers and analysts make decisions about buying and developing new real estate. REITs rely on acquisition analysts to discover new properties for purchase and then send real estate agents and appraisers to negotiate the deals.
Many REITs reinvest their profits into property development, which requires property developers. In both cases, there is a great need for a myriad of supporting but essential roles, such as accountants, public relations officers, lawyers, quality surveyors, and of course, portfolio managers.
While portfolio managers ensure that properties owned by REITs generate profit, property managers are responsible for everything else that happens in these properties. In many ways, they are the glue that holds it all together. It’s a property manager’s job to keep REITs and tenants satisfied.
Sadly, you cannot get a job in REIT without a bachelor’s degree. Even though many job descriptions for a property manager don’t have this as a requirement, people with a bachelor’s degree will always have a leg up. Aside from a property developer, which requires an MBA, all REIT jobs call for this qualification.
If you’re considering applying for a finance manager position in a real estate investment trust, you’ll need a bachelor’s degree in finance – that much is clear. But what if you want to shoot for some of the other jobs available in REITs? For instance, what specialization do you need to work as an analyst?
Since REITs are a combination of finance and real estate, virtually all real estate investment trust jobs require a bachelor’s degree in one of these two fields. You can get a job as a REIT analyst without real estate expertise, but you need a bachelor’s degree in business, finance, or investment management.
Another diploma that can get you a job in REITs is a bachelor’s degree in economics. With this expertise, you can find employment as a REIT investor, site acquisition specialist, or real estate acquirer. To get a real estate attorney job in a REIT, you would naturally need a law degree and a license to practice law.
Being successful at REITs requires a holistic approach to real estate investments. Whether you work on the real estate or finance side of a REIT, you need to have a deep understanding of the other specialty as well as experience of your own. All REIT jobs demand versatility, flexibility, and willingness to learn.
Some of the essential skills needed for these jobs are:
- In-depth knowledge of real estate and market fluctuations;
- Acquisition and sales skills, as well as customer relations;
- Understanding of financial statements and due diligence;
- A deep understanding of different investment trust models;
- Property development skills and construction knowledge;
- Organizational and time-management skills and teamwork.
Pros and cons of a career in REITs
Building a career in REITs comes with a significant number of benefits but also a few cons. Some key advantages of being a REIT employee are flexibility, a great salary, and many opportunities for professional growth. REITs do create a competitive work environment, but there’s still plenty of room for moving up.
REIT employees get more or less flexible work hours depending on the specific role. Some roles, such as analyst, are predominately desk jobs, while others, like property managers, imply a lot of fieldwork. REIT jobs are generally considered a good career option for people pursuing a healthy work-life balance.
The biggest disadvantage of having a job in REITs is that real estate investment is a complex and sometimes volatile field. Though REITs have been around for a long time, and despite real estate always being a sound investment, these companies depend on too many third parties to be 100% risk-proof.
Is real estate investment trusts a good career path?
Whether or not a real estate investment trust is a good career path for you depends on several factors. If you have the necessary educational background and skills to succeed in this field, you’ll probably find it intellectually stimulating and enjoyable to work in a REIT. Not many people would find joy in investment.
Considering what most currently unemployed people in the US expect from their careers, REITs are a fantastic opportunity for those who fit the requirement. Jobs in real estate investment trusts pay well, offer a lot of room for professional learning and development, and are mostly stable.
In real estate investment trusts, executive positions are the highest-paid ones. In the US, real estate development executives have a median salary of $180,691, while the average salary of a development manager is around $100,000. Of course, these figures vary from state to state and from REIT to REIT.
The median pays for high-earning positions in REITs are:
- Portfolio managers: between $87,800 and $121,500 per year.
- Property managers: between $87,993 and $121,839 per year.
- Property developers: between $47,944 and $66,385 per year.
- Acquisition analysts: between $100,000 to $150,000 per year.
One look at the real estate market shows that residential or commercial property remains a good investment even during an economic crisis. Especially now, when the global economy is facing inflation, real estate is a valuable asset that can be monetized well in the future, no matter what.
The COVID-19 pandemic and the Great Resignation have hit commercial real estate. Countless businesses went under, while those that still afloat employ flexible work hours and work-from-home policies. Many don’t need as many square feet as they used to occupy before the pandemic.
Despite all this, the real estate market is still stable. That’s excellent news for REITs, their employees, and individuals considering a career in real estate investment trusts. Analysts predict that this job market will grow at a rate of about 10% per year, which means more high-level positions in REITs.
Is real estate investment trusts a good career path in 2022? Absolutely, yes. Is it the best career choice for you? Unfortunately, nobody can answer that question but you. It’s always a good idea to start exploring your options early and have a list of potential career moves to help you achieve long-term goals.
Career planning starts with identifying the fields, professions, and skills you are good at. If that involves finance, real estate, and investment management, you’re certainly on the right path to building a great career in REITs. If you already have a required degree, there’s nothing left to do but go job hunting.