Simple ways we cut your REIT risk

Article Excerpt

We feel the best way to cut your risk when investing in real estate investment trusts (REITs) is to focus on those with tenants that operate in a wide variety of industries. That way, if a particular industry goes into a slump—like the oil and gas business after 2014—it will only affect a small number of the REIT’s properties. Likewise, it’s important to pick REITs that have a broad exposure to many different regions. Remember to look for REITs that don’t rely on a single tenant for more than, say, 10% of their rental income. As well, we prefer REITs that stagger their leases so only a small number of those agreements expire in any given year. year…