Why I Won't Buy REIT ETFs

REIT ETFs like VNQ stock are heavily invested in large-cap REITs that are more expensive because they are market-cap-weighted. They also invest in property sectors that I prefer to avoid. They invest in externally managed REITs that suffer significant conflicts of interest. They pay a relatively low dividend yield. I think that alpha is attainable in the REIT sector and this is why I avoid VNQ-type ETFs and prefer to selectively invest in individual cheap REITs. I own many of them as part of my dividend portfolio.

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Important Disclaimer: This video is impersonal and does not provide individualized advice or recommendations for any specific person. Viewers/readers should not make any investment decision without conducting their own due diligence and consulting their financial advisor about their specific situation. This video is for entertainment purposes only and you are responsible for your own investment decisions. The information is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The opinions expressed are those of the publisher and are subject to change without notice. This YouTube channel is managed by Leonberg Research OÜ, a subsidiary of Leonberg Capital OÜ.

#reits #dividend #passiveincome

[askjussi]

What do you think about REIT ETFs? What's your favorite?
Thank you for all your support! Your "likes" help me a lot to grow this channel :)
Let me know if I can help with anything.

[wavefunctionsquared]

I like how you have a comprehensive summary of your videos in the description! It helps to keep info from going in one ear and out the other.

[the_renaissance_guy_]

Never hear investors speak like Jussi Askola, your due dilligence before taking risk is balanced. You're an inspiration to us

[Seoulsearch]

Extremely helpful video, thank you! I'm looking forward to your video telling us about your screening process. 👍🏼

[roseymalino]

I agree. After seeing several of your videos, I agree with your assertion that you are better at investing in REITs than the ETF portfolio mgrs. Maybe you should produce a REIT.

[linofrischknecht]

great video and interessting topic as usual ! You mentioned that you might make a video about your selection process. I would be very interested :) Also the topic of valuations/ FFo ratios would be exciting, why you think that some reits are more expensive than others, specific examples, if you think the valuations are justified or not

[PilatesinSacramento]

Another great video, Jussi. Thank you!

[davidwysocki]

Excellent argument against investing in a REIT ETF, Jussi. I really appreciate your thought-provoking investment ideas video presentations, especially those on REITs.

[alexk]

Jussie is a world class REIT investor for sure, but I’ll kindly disagree about avoiding REIT ETFs. VNQ the largest REIT is cap weighted so you’ll always have a majority of whatever the best REITs are at the time. You never have to worry about incurring huge losses from mismanagement or unforeseen circumstances to that particular REIT sector such as we have seen from Offices. You never have to worry about the timing of buying/selling your individual REIT and what capital gains will be incurred. For instance a phenomenal REIT with excellent management like ARE was being written about/promoted on Seeking Alpha when it was well over $200. Now it’s at $109 (nearly half). A low cost/well diversified REIT such as VNQ will always avoid that torrential loss, even on a fantastic company. Anyone can make the case that at these levels, they are a buy and I agree some certainly are, but I’ll sleep well at night DCA’ing into my VNQ. Just getting back to the high is a 30%+ gain and you’ll never have to worry about checking the stock price or worrying if management fumbled the ball. Good luck on your investments everyone.

[bryce]

This video made me have major respect for your opinion. REIT etf’s usually have very mediocre performance.

[eliashuhsovitz]

I only invest in REIT ETFs, because they are much more tax efficient in my country. Dividends from US REITs are taxed up to 42.5% while REIT ETFs are only taxed up to 27.5%. Also, many automatically reinvesting REIT ETFs share a minor tax benefit, where most of the dividend tax can be delayed until the ETF is sold.

[VXDRG]

In other words, this man is basically saying, just get an ETF. This guy has three different degrees and knows the field like the back of his hand. Plus he has credibility online. I’m very confident this guy is going to seek alpha and find it and get his 9% dividends plus the upside, but the rest of us are stuck with ETFs and 4.4 dividends. Unless you think you can balance like this guy……impossible.

[drafonso]

Hello my friend. I'm from Brazil and a huge investor in the USA. Could you help me with a tip, I always follow your channel. Thanks for the teachings. The CCI REIT has been dropping in price a lot and is in great debt. I have it in my wallet. Has he lost ground or is it a buying opportunity? Thanks a lot for the help. Success.

[GyrosSteel]

Great video Jussi, I definitely don't like that VNQ prioritizes the larger reits like PLD that are priced at a premium. What are your thoughts on Safehold? I want to start a position but am having troubling understanding why their share price has plummeted so much since 2021 despite improving their portfolio, was it really just higher interest rates?

[tobiasklein]

Hello Mr. Askola,
for you as a real estate investor, it makes sense not to invest in etf. You take the time to research and have the ressorces and knowledge.

In my case, I don't have the investment budget to invest so many reits parallel. I started shortly. So I invest in Reit etf because of the low prises overall at the moment I cannot make so much wrong with that and I have all the typical ones in the portfolio.

But thanks to your tipps I know now what to look for and I can take your tipps into consideration for some direkt investments.

[Safire]

Interesting information for us to consider, but sadly not practical at all for most people who don't have the education and in-depth knowledge to do things as you suggest. For some, I'm sure this video will be very helpful though.

[robyn_southafrica]

Ah! 🤨😀
Okay.. so basically in a nutshell: etfs for usual portfolio diversification, but general REITs for overall portfolio diversification!?

[VictorSanchezVS]

I have been eyeing this etf called riet, by Hoya. It's $10 a share with 10% yield.
Very tempting

[christophertorres]

I can't disagree or agree here I like REIT ETF's USRT and XLRE which within 10 year return has return 12-14% but. I like both.

[jbones]

What do you think of RIET (Hoya capital High dividend yield Etf)