In response to recent comments, yes, it’s true that some REITs are doing very well in this muddled real estate market. This is due to the buying power that one acquires when large pools of capital are available and housing developers’ blood is in the streets!
I have received marketing materials from one such REIT that advertise an up to 15% cash back upon purchase, wholly disclosed to lenders and upstream investors, for their condominium conversion projects. They buy at substantial discount from developers who to borrow a term from the current White House, misunderestimated their positions in the market and had to dump finished projects in bulk to large investment trusts. In short, for the stock market oriented, there are value buyers out there who are making healthy profits, but watch out. Cash back incentives and other such tricks may not prove a viable business model in the long term, and a REIT can crash and burn just like any speculator if it over extends . . . . .
