In this episode of Zen and the Art of Real Estate Investing, Jonathan sits down with David Auerbach, Chief Investment Officer at Hoya Capital and publisher of The Daily REITBeat Newsletter, to explore the often misunderstood world of real estate investment trusts (REITs). With over two decades of experience in the public markets, David brings clarity to how REITs function, how they’re structured, and why they offer unique benefits for long-term, income-focused investors.
Whether you’re new to real estate investing or looking to diversify beyond physical properties, this episode breaks down how REITs provide access to commercial real estate opportunities without the operational burden of owning property directly.
What Makes REITs a Smart Addition to a Portfolio?
Unlike traditional rental properties or syndications, REITs are publicly traded companies that own income-generating real estate across various sectors. That includes everything from multifamily housing and self-storage to industrial warehouses and senior living communities.
In the episode, David explains how REITs allow investors to:
- Earn consistent dividend income, often paid monthly or quarterly
- Access diversified property types without needing millions in capital
- Maintain liquidity, since REIT shares can be bought and sold like stocks
- Benefit from transparency, thanks to strict public reporting requirements
This combination makes REITs attractive for investors who want real estate exposure with less friction and greater flexibility.
Understanding Market Cycles and Interest Rate Sensitivity
REITs don’t operate in a vacuum. They’re sensitive to macroeconomic trends, particularly interest rates and treasury yields. David and Jonathan discuss how these factors impact REIT valuations, particularly during periods of economic uncertainty.
David also emphasizes the importance of long-term thinking. Chasing short-term performance in REITs often leads to disappointment, whereas holding quality REITs through market cycles can provide strong risk-adjusted returns and dependable income.
Private vs. Public REITs: Know the Difference
One of the key topics covered is the distinction between private and public REITs. David outlines the pros and cons of each:
- Public REITs offer liquidity, regular reporting, and broad market access
- Private REITs may offer higher yields but often come with less transparency and limited exit options
Knowing how to assess risk and align your investment timeline with the right type of REIT is crucial.
How REITs Fit into a Bigger Picture
David advocates for using REITs to round out a balanced portfolio. They can complement traditional real estate investments, stocks, and bonds by offering both income and growth potential. For passive investors who don’t want to deal with tenants, toilets, or turnover, REITs are a powerful alternative.
He also encourages staying informed. Through his Daily REIT Beat newsletter, David provides ongoing updates on REIT performance, market news, and trends that matter to both new and experienced investors.
Key Takeaways
- REITs offer passive income, liquidity, and exposure to high-quality real estate.
- Long-term investing is critical, and short-term volatility is part of the game.
- Public REITs bring accessibility and transparency to real estate investing.
- Understanding interest rates and market cycles helps you invest more confidently.
- Staying informed through resources like the Daily REIT Beat gives investors an edge.
David’s perspective is a reminder that real estate investing isn’t limited to physical property, and that the public markets offer powerful tools for building steady, long-term wealth.
If you want to learn more about Zen and the Art of Real Estate Investing Podcast, check out https://zenandtheartofrealestateinvesting.com/podcast/248/.