Real estate investment trust is a blooming sector. With countries developing around the globe, progressive constructions are considered as the sign of development. The sector dealing with this area is real estate and real estate investment trusts are companies that own, operate or finance these income generating real estates. With a similar pattern of mutual funds the main function of a real estate investment trust is to pool the funds of various investors. Because of a wide range of income opportunities more and more people are inclined towards REITs giving us the scope to talk about some of the best paying jobs in REITs.
REAL ESTATE INVESTMENT TRUST(REIT) OVERVIEW
Real estate investment trust abbreviated as REIT works on the same principle as mutual funds. These companies allow the investors to buy or sell stocks, creating an income stream for investors which is steady but may not offer much in terms of capital appreciation. Unlike physical real estate investments these REITs are highly liquid in nature as they are publicly traded like stocks. The area of investment via REITs covers most of the real estate projects like- hotels, apartments, offices, cell towers, warehouses, hospitals and other medical facilities are to name some.
The business model of REITs is quite straight forward, they gain by leasing space and collecting rent from the properties and then they divide the profit among the shareholders as per their percentage of contribution. The funds of the investors are pooled and are used as the capital for the REITs. In order for a company to qualify as REIT it is important to meet certain requirements:
- An investment of at least 75% of the total assets in real estate
- 75% of the gross income should be derived from rents, sales of real estate and interests on mortgages financing the real estate property
- 90% of the taxable income should be paid in the form of dividends to the shareholders every year
- After its first year of experience the number of shareholders should meet the criteria of 100 shareholders
- Should have a board of directors or trustees to manage the functions of the REIT
- Should be an entity that is taxable as a corporation
- Not more than 50% of its share should be held by 5 or fewer shareholders
Now before jumping to the best paying jobs in REITs we must take a quick look at the types of REITs.
TYPES OF REITs
Broadly there are three types of REITs:
- Equity REITs– The REIT that owns and operates income producing real estates and generates its revenue by renting and not reselling the properties is an equity REIT.
- Mortgage REITs– This type of REIT holds mortgages on real properties. They lend money to the owners and operators of the real estates directly or indirectly. The direct method involves mortgages and loans and the indirect method involves acquisition of mortgage backed securities. Mortgage REITs are possibly sensitive to interest rate increases as they generate their remuneration by net interest margin, primarily.
- Hybrid REITs– As the name itself suggests hybrid REITs use both equity and mortgage as their investment strategy.
Apart from these there is an asset class where REITs are more specifically classified based on the area they deal with. Office REUTs, industrial REITs, residential REITs and infrastructure REITs are to name some.
BEST PAYING JOBS IN REITs
From back office jobs to handling operations and dealing with customers face to face, there are a plethora of jobs in REITs, like any other company. Some of the best paying jobs in REITs can be found in the following domains:
WORKING AS AN ANALYST
Scouting new opportunities for investments and taking a deal to the finishing line is the main task here. This is however finance driven so it is better to have a financial educational background to perform more efficiently in this very domain. Since the start of their careers, analysts usually are capable of earning around $ 80,000 annually.
WORKING IN THE DEVELOPMENT TEAM
Building new projects from ground up is the responsibility of this team. Along with the finance they also deal with the contractors and other related toils. The job is demanding and requires a lot of investment of time. But at the same time the higher authorities in this team make their annual income in six figures.
Property managers organize the operation of an individual’s property. This includes leasing, maintenance, rent collection and everything that comes in between. The most intriguing skill of a property manager is that he knows how to get things done. There is no specific qualification required to be a property manager. The newbies are able to make $ 60,000- $ 80,000 per year.
Within the REIT there is a portfolio of the assets, to oversee the operational and functional performance of this portfolio is the job of asset manager. Generally junior asset managers work under the vice president or the head of the asset managers and they report directly to him. They work in collaboration with the acquisition, accounting, developments and other different departments of the REIT. After some experience one can become the head of the asset managers and can earn up to $250,000 per year.
WORKING IN THE INVESTOR RELATIONS TEAM
The investor relations team works as the link between the REIT and the shareholders. They look out for the documentation and meetings of the shareholders and the REIT. With some experience in this field one can easily make a salary of approximately $150,000 per annum.
In a nutshell REITs function in a simple manner. They pool money from the investors to spend suitably on the properties and provide the profit to the shareholders in the form of dividends.