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Investing in Reits: Real Eatate Investment Trusts (Bloomberg Personal Bookshelf (Burlington, Ont.).)
written by Ralph L. Block
Studio : DH Audio
by DH Audio
Publisher : DH Audio
Released : 1998-09
Availability : Usually ships in 1-2 business days
Number of Items : 2
EAN : 9780886464745
UPC : 057943647496
Avg. Customer Rating: (based on 24 reviews)
List Price : $16.99
Our Price : $1.49
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Product Description |
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What REITs are, how they work, what properties they own, and why they deserve an important place in any diversified investment portfolio. Ralph Block's classic is newly updated to reflect all the latest changes in the industry. |
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Missing aspects I was looking for. |
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After doing lots of reading from investing books, I wanted to learn more about the REIT asset class of investments. This book had some good information, but the main information I was looking for was how taxes are reported and why they are fairly complicated. The author only gave a two page appendix on taxes. I felt like he spent way too much time on why you should invest in REIT's and the aspects of when to buy and what to look for individual REIT's and not the big picture of owning REIT's in an mutual fund or REIT index fund. I was more concerned on how taxes affect your investment's location (Taxable vs. Tax Advantaged) and that was totally ignored. Dissapointed. |
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Great intro to REITS |
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Great book for someone trying to get a basic understanding of REITs written from an investor's perspective. |
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May Require Above Average Work for a Little Extra Return |
I came across the first edition of this book in my local library (along with Mullaney's book on REITs). That edition hit all the right notes, and as expected from someone who manages an REIT fund, Block reserves considerable space in the book for his pitch for the REIT as a great investment vehicle. Overall, I found the first edition to be balanced, even-handed and a solid introduction to the REIT, though I did have a few criticisms about REITs in general. These are the following:
1. REITs generally are high yield investments. Block failed to address the common dangers associated with any high yield investment, and he did not mention any specific means for the investor (particularly small investors like myself) to shield these juicy yields from the tax man. In passing, over the long term, I am of the opinion that carefully selected REITs will provide an adequate total return, and the prudent small investor would do well to include a select few of them in a Roth IRA.
2. Block tries to compare REITs with other income producing stocks, and generally fails in this regard. Though REITs have similarities to utilities and preferred stock (the one over-riding similarity being the fat yield), there are too many differences between REITs and other income producing investments to make a fair comparison.
3. I believe that an REIT should be evaluated as a common stock first, and then as a real estate play second, rather than the other way around, as Block preferred to do. Granted, the basic nature of the activity should be taken into account, but one should never forget that the publicly traded REIT is a stock. That said, less attention should be paid to the FFO (funds from operation) or AFFO and more should be paid to net income. FFO can be gamed, as Block correctly pointed out, by the creative interpretation as to what constitutes depreciation (FFO is typically defined as net income, less capital gains on sale of real estate, plus depreciation).
4. Block correctly identified the importance of capital structure for the REIT, and did a good job of explaining the REITs need for capital infusions. Intelligent investors in this activity would do well to keep in mind that institutional players get to participate in REITs as either bond-holders or preferred holders, and thus they get sweeter deals than the little guy, who, unless he participates through a mutual fund, will almost always participate as a common stock holder. Moreover, the little guy gets paid his dividend AFTER the institutional players get their cut. Also, I disagree with Block's notion that market cap is a good indicator of REIT capitalization. Essentially, I feel that REIT capitalization is best measured by the balance sheet ( debt load plus cash position and equity), and while not the best measure of capitalization, it is, in my opinion (which granted ain't worth much)better than the use of a subjective measure which changes as market conditions change.
5. I found it odd that Block did not mention the importance of cash flow for the REIT. At a minimum, the REIT has to be able to service its debts. An REIT with a weak cash position and cash flow constraints can not deliver a fat yield for long. Intelligent investors in this activity would do well to be very wary of an REIT that pays out more in dividends than it actually earns in net income per share. An outfit doing this is generally eroding its cash position, thus weakening its ability to service its debts and making it vulnerable to adverse external conditions.
6. My last point is perhaps the most important. The little guy looking to profit in this space is up against 1) insttitutional players who can get sweeter deals as mentioned before and 2) real estate pros who are closer to the various real estate markets and eat, sleep and breathe real estate 24/7. The little guy would do well to know market cycles, specific property types and demographic trends very well before looking at REIT investments. Also, the pros more typically have access to a greater variety and volume of information than is typical in more traditional common stock investment, so on that score, the small investor is fairly well disadvantaged. Thus, I am of the opinion that REIT investment may require a lot more work for a little extra gain, so it is best to dabble lightly in this space.
In sum, this book, now in its third edition, makes for a good starting point for REIT investment. In passing, a more accessible, albeit dated text on REIT investment is John A. Mullaney's REITs: Building Profits with Real Estate Investment Trusts. Those of you looking to invest with safety and success in this space would do well to pick up the latter book and memorize Chapter 16 of the text word for word. |
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A sensible handbook on investing in REITS |
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More and more financial advisers suggest investing in REITs. But are they another real-estate investment fad, like the "real estate limited partnerships" of the 1980s? Not at all, says Ralph L. Block, an experienced REIT portfolio manager and former securities attorney. In this clear, sensible book, Block provides an engaging overview of REITs and the underlying real-estate market in which they invest. Block's self-deprecating, casual style is refreshing, and the book assumes little background knowledge of finance, economics or real estate (though it does bog down occasionally in accounting minutiae). In addition to learning about REITs, you'll also get a painless refresher on investment basics at no extra cost. We recommend this book to prudent, buy-and-hold investors who want to know if REITs are right for them. |
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THE Book to Buy About REITs |
Most investors can point to an elite handful of teachers that they would credit for their investment success and overall knowledge of markets. Warren Buffett, Peter Lynch, and perhaps John Bogle are the best-known great friends of the individual investor in our generation. I don't say this lightly, but for any investor trying to get a handle on the REIT asset class, Ralph Block is in their esteemed company.
You won't find a more clearly written book about REITs anywhere, and beginning investors to hedge fund managers would be well-advised to digest everything that Ralph puts forth in his continually updated books on REITs. The metrics used to evaluate REITs, the forces which make them rise and fall, and their tax implications are different enough from other asset classes that any conscientious investor should keep this book handy. Ralph does a masterful job of making this fine asset class easier to understand, and he helps investors know where to spot risk, growth, management excellence and ultimately, opportunity.
REITs have gone from being an undiscovered backwater in the investment world (perhaps because so many real estate limited partnerships in the 1980's were indeed toxic waste) but today they are clearly mainstream. Investors need to understand what they own, and Ralph's book helps readers understand exactly that. He writes in a clear, succinct fashion that is manna from heaven for both the new investor and private equity guy alike. People focusing on P/E ratios, MACD divergences and EBITDA would be well-served to invest a little time and a teensy amount of money in this book to get a handle on AFFOs, NAVs, and most importantly, great REIT management teams.
Ralph is a looong-time REIT investor, has been a top-rated REIT fund manager and he has a unique perspective on this important asset class. His contributions to REIT understanding have been recognized by NAREIT (the National Association of Real Estate Investment Trusts) and by many individual investors through his books and his well-received contributions on The Motley Fool message boards. Feel confident that purchasing his book is a good decision on your part.
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