Investing in REITS by Luis Pazos looks at the German's favorite child - real estate - in a light that is still completely unknown to many: Most people would agree with the assertion that a considerable fortune is needed to invest in concrete gold on a broadly diversified basis. And a large portfolio of housing units involves a lot of expense, or at least further costs for management, etc. Investing globally, moreover, is almost impossible.
"REITs are still not well known in Germany and the author would like to clear this up."
Most people would not disagree with these two statements either. Luis Pazos proves that you don't have to leave these two statements as they are. He knows the easiest and fastest way to global land ownership better than anyone else.
Focus of the author
Real Estate Investment Trusts (REITs) is the author's magic word. These securities are the cost-effective and efficient way to build up an international real estate portfolio from the couch, even with small assets. One must never forget with the author that its focus does not lie however on the increase in value of the financial investment, but on their regular distributions. This is a fundamental difference to a long-term investment in broadly diversified stock portfolios. True to his motto "Only cash is real", Luis Pazos thus achieved his financial independence.
REITs are still not well known in Germany and the author would like to clear this up. Without exception, these are listed companies that are active or must be active in the development, financing, administration and management of private, commercial and public - undeveloped and developed - properties. This results from the obligations of the special tax status that these constructs have. However, this set of rules also results in a number of advantages for investors, such as a minimum 90 percent distribution of the income generated.
The investment universe of REITs comprises more than 1,000 different securities, only a few of which are offered by the usual brokers. If you are interested in a comprehensive investment in REITs, you should look for a suitable provider. CapTrader is such a provider. The complete investment universe is only offered by the leading Swiss online broker Swissquote, which is significantly more expensive than CapTrader.
Tidbit from the author
In the middle section of the book, as a little treat, there are introductions by the author to some potential securities before moving into choosing the right broker to strategy building with some chapters on returns, risk metrics and company metrics.
I can only recommend this book to anyone who wants to take a closer look at the subject of REITs. The author also deals extensively with the risks of this asset class, whether they are political, fiscal or cyclical.
It should not be forgotten at this point that REITs, for example, are very sensitive to changes in interest rates and thus represent a high risk in times of crisis with sharply falling real estate prices, as in 2008.
Nevertheless, REITs are probably the only way for the vast majority of investors to participate in the real estate market on a broadly diversified basis.