As a small business entrepreneur in commercial real estate, I‘m often asked if pursuing a career path in real estate investment trusts (REITs) is advisable. There‘s been immense growth in the REIT industry, with over 225 publicly-traded REITs in the US managing assets over $3 trillion. With this expansion comes exciting career opportunities.
But is a job in the REIT sector right for you? Let‘s dive in and explore the key pros, cons, and qualifications needed to make an informed decision.
A Primer – What Are REITs and How Do They Work?
REITs are companies that own and manage diversified real estate assets like apartments, data centers, hotels, medical facilities, shopping malls, and warehouses. By law, they must pay out 90% of taxable income as dividends to shareholders annually.
This unique structure provides investors exposure to real estate similar to a mutual fund, without needing large amounts of capital or real estate expertise. For young professionals, REITs offer a compelling career path combining real estate and finance.
Examining the Main Career Paths in the REIT Industry
REITs require experts across a range of specialties to find, acquire, manage, and optimize their real estate assets. Some of the most common REIT career paths include:
Asset Managers
REIT asset managers develop portfolio strategy, assess market conditions, execute property acquisitions and sales, and manage broker and property manager relationships. Strong analytical abilities are crucial, as asset managers use financial modeling and valuation techniques to make optimal investment decisions. According to Payscale, REIT asset managers earn an average salary of $140,925 annually.
Property Managers
Charged with handling day-to-day operations of properties owned by REITs, property managers deal with budgets, maintenance, tenant relations, vendor management, leasing activities, and ensuring smooth overall operations. Strong communication skills are vital when dealing with diverse tenant needs. Average reported pay for REIT property managers is $58,440 per year.
Analysts
REIT analysts conduct in-depth research and analysis on market conditions, property valuations, and overall industry trends. Financial analysts specifically focus on analyzing REIT financial statements, earnings forecasts, and investment risks to guide decision-making. Market research analysts study macroeconomic factors like employment rates that may impact real estate markets. According to Glassdoor, REIT financial analysts earn an average of $66,515 annually.
Transactions Specialists
REIT transactions specialists manage the process of acquiring new property assets, including conducting due diligence, negotiating purchase and sale agreements, and ensuring compliance with regulations. Analytical abilities and strong attention to detail are imperative when reviewing complex contracts. These specialists earn median pay of $63,000 per year based on reported salaries.
Key Benefits of a Career in the REIT Industry
Stable Long-Term Growth
The REIT industry has experienced steady long-term growth for over 50 years. Investor demand continues rising as REITs offer attractive dividends. Jobs in REITs tend to be more stable than real estate development, which is more cyclical based on housing markets. Publicly traded REITs also provide career stability not tied to individual property performance. According to NAREIT, the number of REITs grew by over 25% from 2012 to 2022.
Lucrative Salaries and Benefits
Compared to many real estate roles, REIT career paths tend to be very well-compensated, along with strong benefits. The average REIT employee salary in 2020 was $115,378, with over 75% of companies offering bonuses and 45% providing stock options, according to NAREIT. High-demand roles like asset managers can earn over $250,000 with experience.
Intellectual Stimulation
Working for a REIT offers daily intellectual engagement analyzing markets, assessing property values, optimizing portfolios, and modeling complex investments. Young professionals who enjoy continuously learning and problem solving tend to thrive in the REIT industry.
Key Challenges to Consider
Susceptible to Market Cycles
Though not as volatile as other stocks, REIT shares are impacted by broader economic conditions. In recessions, declines in real estate values can reduce REIT dividends and profits. Hiring may also slow down. However, maintaining specialized REIT expertise helps weather downturns.
Long Hours
Some REIT positions require long hours during busy periods, like financial report deadlines or large acquisitions. Property management roles may also involve being on call to resolve tenant issues. Strong time management abilities are essential.
Complex Regulations
REITs must follow intricate tax, legal, and securities regulations that evolve over time. Staying current on compliance is critical yet challenging. Mistakes can damage the REIT‘s reputation and stock price. A meticulous eye for detail helps reduce regulatory risks.
Education and Skills Needed for a Successful REIT Career
While no specific education is required, most REIT professionals hold college degrees in real estate, finance, accounting, or economics. Useful credentials include:
- real estate licenses for broker-related roles
- Chartered Financial Analyst (CFA) designation for analysts
- Certified Property Manager (CPM) for property managers
Some of the most important skills for thriving in the REIT industry include:
- Strong financial modeling, analysis, and valuation abilities
- Excellent communication and presentation aptitude
- Ability to interpret and apply complex regulations
- Rigorous research skills
- Commercial real estate knowledge
- Persuasive negotiation talents
Gaining direct industry experience through internships or entry-level roles is also highly valued when starting out.
Breaking Into the REIT Industry as a Young Professional
Attempting to break into REITs directly after college can seem daunting. However, there are clear steps to set yourself up for success:
- Obtain internships at REITs or related companies while in school to gain hands-on experience
- Take additional real estate and finance coursework to build specialized knowledge
- Study and sit for the CFA Level 1 exam to demonstrate analytical abilities
- Attend REIT conferences and networking events to build connections
- Pursue entry-level analyst or associate roles and be willing to work hard to stand out
- Consider rotating through different departments like asset management and property management to gain well-rounded expertise
With persistence and dedicated skill-building, young professionals can absolutely launch fruitful careers in the thriving REIT industry.
Should You Pursue a Career in REITs? Evaluating the Pros and Cons
Pros
- Stable long-term growth and demand for skilled professionals
- Lucrative salaries with attractive benefits packages
- Intellectually stimulating work combining real estate and finance
- Ability to gain broad real estate investment exposure
- Continuous opportunities to learn and build expertise
Cons
- Challenging hours and deadlines during busy periods
- Requires keeping up with complex regulations
- Can be impacted by broader economic downturns
- Very detail and analytical focused
Weighing these key pros and cons will help determine if a REIT career aligns with your professional goals and strengths. For those who enjoy analyzing complex details, strategizing over portfolios, and continuously expanding their real estate knowledge, the REIT industry promises rewarding lifelong careers.
