Good time to buy REITs?

ads answered 8 months ago …

Depends on the REIT in question. There are some that are good and others that are bad, just as with any other investment sector. This is where doing your homework is essential, as it is never a good idea to invest into random bits of a sector just to get into that sector, as you may end up investing into the worst part of that sector in an attempt to save a little money. Be sure to find one that has very good P/E, PEG and P/B ratio's (better than the REIT industry average) but then be sure that their holdings are solid and that they are financially strong (low debt and the specific part of the real estate market they are in is not going to hurt them any further than they have already been hurt). You also need to do a long-hard look at the above mentioned PEG, as this is based off of a forward looking estimate of expected earnings growth, which may not be accurate. Likewise is the Book Value used to calculate the P/B ratio truly accurate in today’s real-estate market? Then you may also need to be very patient, as mahoneybe suggests, the real estate market is in pretty rough shape right now (and while I suspect it may decline a little further yet, although I suspect it won't get too much lower) and it will take some time to recover. So while the prices may be good right now for this type of an investment, you will need to do your research and then be very patient (and keep a close eye on them, but not panic if they do decline a little more).