Tag Archives: REIT

Waiting on the DIP

It’s been a while since I published an article here. The reason for that is very simple, I haven’t been doing any major investments. Months ago the word around was that the market was going to drop. At that time I just started accumulating funds to wait for the DIP. I figured that it would be an excellent time to expand my holdings.

Well, for me, the DIP never materialized, My portfolio increased an average of 29%. I’m not complaining but I was looking forward to picking up some larger quantities of the EFT’s I own. But they’ve been going up steadily. My REIT’s have been my best performers. ABR & ACRE have increased in market value by 84% & 46%, respectively. And all of my holdings are still paying dividends at the same level as before or better, and I’m still reinvesting those dividend funds.

Even my 401K has been doing well. VFIAX has had a gain of 30% while VVIAX has gained 12%. And my money market account gained 27% since I purchased them. It’s great to see those gains but I have a long way still to go to reach my goal. But I’m happy my investments are going in the right direction.

I Like REITs

You can’t swing a dead cat on the internet or investment groups without getting someone to tell you that you should invest in this stock or that stock. For myself, still being an investment newbie, I tend for discuss generic investments. One of those that I am drawn to is REITs (Real Estate Investment Trust). I can’t afford to go out and buy individual real estate property so the next best thing are REITs. When I was in the real estate industry I was always told that real estate was a finite commodity. New land was not being created/manufactured. True.

So, why do I like REITs? They invest in most major property types with nearly two thirds of investment being in offices, apartments, shopping centers, regional malls, and industrial facilities. REIT shares are bought and sold on a stock exchange. Buying actual property is more involved and usually needs to have additional parties included in the transaction process. Picking a REIT is less stressful than trying to pick a property to buy. Depending on which REIT you decide to invest in, it can be a low-risk & high return investment. Don’t misunderstand me, you can’t just pick any REIT to invest in, You need to do your due diligence and learn whatever you can about the REIT. Does it’s business focus on buying & managing properties? Or are they focused on originating mortgage loans and servicing them? Maybe their business is trading in mortgage backed securities. I tend to lean toward REITs that own and manage properties but won’t shy away from those that originate mortgage loans. I prefer those that deal in commercial and industrial properties. I own 2 REITs –

$ABR – operates as real estate investment trust, which engages in the provision of loan origination and servicing for multifamily, seniors housing, healthcare, and diverse commercial real estate assets. 
$ACRE – engages in originating and investing in commercial real estate loans and related investments.

Tax issues for REIT investors are fairly straightforward; REITs send 1099-DIV to the shareholders which contain a breakdown of the dividend distributions. Because REITs do not pay taxes at the corporate level, this leave more of the profits for distribution as dividends BUT the investors are taxed at their individual tax rate for the ordinary income portion of the dividend.

There are some drawbacks to REITs. The current COVID-19 pandemic can have adverse impact on the ability to collect rents. Also, changes to local property taxes can impact the REIT’s operating costs. I’ve never heard of property taxes ever going down. Another downside is that taxes are due on dividends, and the tax rates are typically higher than most dividends are currently taxed at. This is because a large chunk of a REIT’s dividends (typically about three quarters, though it varies widely by REIT) is considered ordinary income, which is usually taxed at a higher rate.

That said, I still like REITs but my portfolio isn’t too heavy in them. Pertaining to real estate I also own a real estate ETF ($VNQ). This allows me to own shares in many different real estate properties (i.e. $PSA) and REITs (i.e. $AMT) at a price I can afford.

My Current Holdings


A few people have asked me what stocks & funds have I am invested in.  As I have stated in previous posts I tend to lean toward funds (mutual & index), ETFs, and REITs.  I’m seriously contemplating to expand to other areas.

Currently, I am invested in:

On Robinhood –

I’m looking to add either $BEP or $T.  Both pay good dividends.

On TD Ameritrade –

Here I’m looking to add QYLD.

My mutual fund stock is on Raymond James –

And lastly my 401K on PCS –

Why so many different accounts?  Because each serves a different purpose.  Robinhood & TD Ameritrade are the only ones that I actively trade stocks on.  PCS holds my 401K from my job and the company decided that is where they want those shares to be managed.  Raymond James was one I added for my retirement distribution from a corporation that I use to work for and vested my retirement fund.  I’ll leave that one there until the end of 5 years.

Where to start

If you are like me you are new to investing and just starting out. Where do you start? A great question and I was lucky to know someone who was a seasoned investor and able to nudge me along in the right direction. The first thing my friend suggested was that I develop an investment strategy. What did I want to accomplish and what was the timeframe I was working with.

The first question was fairly easy – I wanted to replace my current wages with the passive income. The second one was already answered for me – 5 years. I didn’t have too many work years left for me. Father Time tends to catch up with all of us. Another factor in my strategy was that I wanted to avoid high-risk investments. I couldn’t eliminate ALL risks but I could avoid the high ones that have devastating financial results.

The other thing that I did was to learn whatever I could about investing and the different aspects of investing. I needed to learn which investing method would help me reach my goals. To this end I searched for online communities where I could just lurk and learn about investing. One of the ones I found was Investing For Beginners on Facebook. Although every group is going to have their share of annoying posters and useless posts & comments, you can still find some useful information.

I learned that Day Trading was not for me. Too risky. Proponents of Day Trading will tell you that you have to take big risks for the big payoffs. But to me that is too much like gambling at the casinos and I don’t do that. Value investing is not going to get me to where I want to be. Yes, I may win big but I also can lose all of my investment, which I may not have enough time to start from scratch again and recover. That left me with Dividend Investing.

Dividend Investing is where you invest in stocks that pay high & consistent dividends. Well, that was surely the way to go for me. Again, I spoke with my friend. He steered me to 2 online services that would help me determine which stocks to potentially invest in. They were Seeking Alpha and Finviz. So, I started to develop my detailed strategy of how I was going to invest my money.

  1. The primary step was to set aside 5% of my income toward investing.
  2. I then searched for stocks to invest in. My criteria was to select those that paid better than 5% and that had continuous and consistent dividend growth.
  3. I also wanted to remain within the REIT sector.

This was a good start.