08-05-2021, 05:46 AM
I wouldn't touch an mREIT in these market conditions. As long as the housing sector stays healthy they can be ok. But they are very risky in general and quite frankly I smell bad times coming to the housing market sooner or later. The recent increases in price of housing are not healthy. Now the average mortgage might be somewhere around 1.5% or 2%, and these guys are pulling in enough to pay their owners 9% after covering the operating expenses. That tells you how much risk and leverage they have.
mREITs are great cash generators as long as everything goes smooth but they get rapidly wiped out when things go sour.
mREITs are great cash generators as long as everything goes smooth but they get rapidly wiped out when things go sour.