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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: REIT for Income Date: 1/5/2001 11:40 AM
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If you do a search, you will probably find quite a few messages on REITs.

Although some offer high yields, they are also risky investments. So put only a portion of your funds in them and be prepared to take some losses.

Before you invest, make sure you understand what segments of the real estate market your REIT invests in. Rising interest rates have decimated many segments of the mortgage based REITs business. Those that originated mortgages saw reduced business in refinancing and had margins squeezed. They may be recovering if interest rates continue to fall, but a recession could cause an increase in defaults.

The commercial real estate industry is grossly overbuilt in many regions of the country. Big box stores continue to build forcing mid size retailers into liquidation. Mall based department stores are not doing so well these days. There are lots of vacant shopping centers around and it seems likely there will be more soon. Buying into this industry is risky--but could be a winner if you do it at the right time and are patient.

In this part of the country at least, grade A office space and hotels are in short supply. There is lots of building going on. But the effects of the dot.com melt down have not yet been fully felt. These things could be at their peak--especially if the economy goes into recession.

I am sure there are more segments. This is just a brief intro. Make sure you do your homework before you invest.
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