Who am I? I am a litigator in my early 30s from California. I don’t have an MBA, I’ve never worked on Wall Street, and the closest I’ve come to starting a hedge fund is getting together some funds to buy a hedge in the Home Depot garden department. I am, in short, an amateur, a nobody, another anonymous voice within the vast chorus of into-the-void screamers that is the internet. There is nothing that makes me special, but there are, perhaps, a few things that make me unusual.
Ever since I was a kid, I’ve been drawn to hobbies that involve numbers. When I was in 5th grade, I found a paperback almanac on my parents’ bookshelf and it contained a list of the 50 largest U.S. cities ranked by population according to the 1990 Census. I memorized the list, and ever since then I’ve had a weird tendency to memorize city populations. To this day, if you give me a major U.S. city, I could probably give you a pretty good approximation of its city-limits population. Shortly after that, I started collecting baseball cards, during which phase I spent innumerable hours poring over the statistics on the back of the cards. (This interest would, in fact, never go away, and would indeed become somewhat weaponized with the subsequent advent of sabermetrics and the creation of sites like Fangraphs. One should probably expect that this blog, being subject only to the editorial whims of its creator, will likely feature the occasional post about fantasy baseball.) So it was probably only a matter of time until I discovered investing.
This is, of course, a blog about investing – more specifically, dividend investing, and, even more specifically, REIT investing. (I’ll do some basic introductory what-is-a-REIT type posts later, I’m sure, but for now I’m going to assume that if you took time out of your day to find and read a blog about REITs you probably already know the basics.) Any blog devoted to a particular investment strategy should, in my view, begin by concisely answering two questions: First, why do you choose to invest this way? Second, why are you blogging about it?
The answer to both questions, of course, is that life has no intrinsic meaning and we are all hurtling through space around a dying star en route to a certain death and so, since nothing matters, we may as well fill our days with cold beer, spicy tacos, and REIT blogging. Anything to avoid the void. Of course that’s kind of a “higher level” answer which may leave some readers a bit unsatisfied. The less-existential-dread-laden answers are as follows:
Why I invest in REITs: I should say at the outset that I do not invest exclusively or even primarily in REITs. The majority of my portfolio consists of passively managed, low-fee Vanguard index funds and that will continue to be the case. However, in addition to the Vanguard Total Stock Market Fund (VTSAX or VTI, depending on how you invest), I also purchase individual stocks. My personal philosophy on individual stock purchases is that I exclusively purchase dividend-paying stocks. There is no pre-determined minimum yield, but as a rule of thumb I shoot for stocks that yield more than an S&P 500-tracking index fund (currently about 1.7%.) There are a few reasons for this:
- One of the most persuasive investing books I’ve ever read was The Future for Investors by Jeremy Siegel. This will be the subject of a future post for sure, but for now suffice it to say that Siegel makes a great case for owning dividend stocks. At the end of the day, the main reason I like dividends is simple: I believe that a higher-yielding portfolio will eventually make me richer than would the alternatives.
- I like the income stream produced by a high-dividend portfolio. One of the cornerstones of the FI (financial independence) crowd is the 4 Percent Rule, which provides that you will probably be fine in perpetuity if you spend 4% of your invested capital each year. If your portfolio yields 4%, that makes life really easy, because you can support your lifestyle without ever reducing your equity positions.
- I’m a pretty conservative investor, and the companies that pay healthy dividends tend also to be the sorts of companies I like to invest in – e.g., banks, consumer staple firms, and, of course, REITs. I have no doubt that I could make more money if I picked the right high-flying growth stocks and exciting biotech small-caps, but the likelihood that I would actually pick the right high-flying growth stocks and exciting biotech small-caps is slightly lower than the likelihood that I will be abducted and rectally probed by extraterrestrials within the next 72 hours. (I was, after all, a history major, which means that as far as I know everyone inside a biotech firm’s office spends all of his or her time wearing a white coat, swirling green goo around inside of an Erlenmeyer flask, and pensively saying “hmmmm.”)
So, that’s why I like dividend stocks, but why REITs? Well, obviously one big reason is that REITs pay great dividends. In fact, they are required by law to do so.
The other reason I love REITs is that they are relatively stable, immune from technological disruption*, and easy to understand. I firmly believe that you should only invest in businesses that you understand. You are, after all, becoming an owner of the business when you buy shares. You may never know when to buy and sell with any stock, but you’ll certainly never know when to buy and sell if you don’t have a clue what the company does. Most of the time with REITs, you can be as dumb as I am and still understand the business pretty well: It buys real property and leases the space out to tenants who pay rent. There’s always going to be some demand because, well, human beings exist within the space-time continuum and, as a side-effect of that fact, require physical spaces in which to live and work. This being a capitalist society, most of those physical spaces cost money to occupy, and, if you own REIT shares, some of that money ends up going into your pocket.
Why start a REIT blog? I spend a decent percentage of my free time learning about REITs, and this blog is a vehicle for me to share what I’ve learned with the (probably somewhat small) group of individuals who might actually find it interesting. (My wife, who is an absolutely wonderful woman and far too good for me in every respect, is, weirdly enough, not terribly keen to hear me wax on about yearly fluctuations in AFFO.) Frankly, my hope is that doing the research and writing involved in the maintenance of this blog will make me a better REIT investor. If it can make someone else a better REIT investor too, well, that would be a pretty badass outcome.
Here’s what this blog is not: It is not another “financial independence” or “FIRE” blog. I don’t have anything against the FIRE crowd, and, in fact, I more or less am one of them. I just don’t think the world needs another less-funny version of Mr. Money Mustache, which is what I would be if I wrote a FIRE blog. Besides which, a lot of the content on those blogs is pretty dreadful. There is really only so much you can actually say about personal finance: (1.) Make as much money as you can. (2.) Don’t buy a bunch of bullshit you don’t need. (3.) Do profitable stuff with the surplus. (4.) Repeat until you are rich. There, I’ve spoiled the ending for you. People can go back and forth about whether it’s better to pay off student loans or buy VTI shares, but at the end of the day anyone who does those four things for a long enough period of time is going to end up pretty well-situated. You as a Citizen of the Financial Internet do not need me to tell you to turn off lights when you aren’t using the room, and I would derive no pleasure in typing out that pointless reminder. I would, however, derive a not-insignificant degree of pleasure in analyzing various real estate investments, and, since the internet does not appear to be awash in other, better-written REIT blogs, it might actually be useful. So here we are.
So that’s the manifesto. I’m glad you are here. I don’t really intend to promote this blog, and I have no idea if people will ever end up reading it. But if you want to hang out and talk REITs with the Dude, I would encourage you to stick around. You might find that it… pays dividends. (Oh, yeah, there will also be dad jokes.)
*Not totally immune, of course. Just ask mall REIT owners how they feel about Amazon or hotel REIT owners if they love AirBNB.