Mortgage REITs?
When we talk about real estate investment trusts (REITs), we separate them into two categories: Property REITs and Mortgage REITs. In this current economic environment, we like one type far better than the other. PROPERTY REITS are companies that invest directly in real property. For instance, they may own residential real estate, such as apartment complexes, or they may own commercial real estate, such as office buildings. Right now, neither of those investments is performing very well. With such low interest and mortgage rates, consumers are eschewing rental properties and instead borrowing money to buy houses. And the economic downturn has forced mass layoffs and bankruptcies, reducing the need for office space. Office space vacancy is over 15% nationally, and when more long-term leases run their course, that number could rise to 18-20%. With investments not performing up to par, these REITs will have trouble holding their dividends up. Already, many have acknowledged the problem. I
