REIT-TIREMENT - REIT Investing and Personal Finance

A blog about REIT investment and personal finance

Sunday, July 05, 2020

Is REIT Analysis Really Necessary ?

After recent posts on SREITs analysis, there is 1 question comes into my mind: is REIT analysis really necessary? This is a question, (or rather a statement) in which two experienced investors (also bloggers) told me straight to my face a few years ago.
I can still remember clearly the key comments as below:
i ) Why do you have to study so detail for REIT?
ii) No one research REIT in a detailed way like you, which is not required.
iii) REIT is ONLY for dividend, if you accept the yield, just buy it. And THAT IS IT.
iv) You are spending (wasting) too much time in REIT analysis, which is NOT necessary.
They may not remember what they've said, but I do. I did not voice out to defend my view then, because I know by doing so would only reinforce their view. From their extremely confident way of speaking, the capital gain is the ONLY holy grail in investment gain.
my mind at that point of time
Let's not go into whether they are right or wrong, profitable or not. The fact they undermine one's effort is simply not constructive to help others to grow. Fortunately, I did not follow what they've said, else I would not have started this blog to share my experience. 

I have an analogy that I'd like to compare with REIT analysis. It is like a student study for an exam. The more he/she study, the "higher" chance to score well. Study more could increase chances to score well, but not certainly will. However, it should not serve as an excuse for not doing so. Often, the more I learn, the more I realized how much I don't know. 
Okay, let's conclude it, I totally disagree with them. Same as per stock analysis, REIT analysis is required as well and it should not be done just on the surface. REIT business model is simple to understand, but the analysis is certainly more than just checking on DPU, yield, NAV, occupancy, or gearing ratio. Hopefully, my blog could provide readers with ways to look beyond the surface.

2 comments:

  1. Jiayou! Analysis is always required; albeit different extent and amount. Reit is still easier to analyse compared to stocks, becoz the financials are more straightforward. Properties is what we can see too 👍🏾 How else do you tell if a business is selling well? Or fulfiling their contract book values

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    1. REIT is considered as 1 sector, so financial statement is similar. Once you go through few times, you will definitely get more and more familiar to it. Same to other stocks, if you only analyze one sector, then you will get familiar over time. If you split "stocks" in to specific sector, then REIT is easier to analyze does not apply.

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