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What to do with REIT?
Old 03-21-2018, 09:20 AM   #1
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What to do with REIT?

I have about $30k in VNQ REIT. It is down -8.8% YTD and -10% over 1 year. I assume it keeps going down due to interest rates. Should I keep VNQ in my portfolio? Sell it? or add more to it?
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Old 03-21-2018, 09:24 AM   #2
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Is it part of your desired allocation? Or are you just stock picking?
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Old 03-21-2018, 09:34 AM   #3
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Is it part of your desired allocation? Or are you just stock picking?
Good question. It only represents about 1% of my portfolio. Rental Real Estate represents 14% of my portfolio. So, I was adding the REIT to that investment resulting in 15% allocation to "real estate".

I bought VNQ a long time ago just to dip my toe in the REIT water and try and learn. I do not think it matters one way or another whether I keep it. Since it keeps going down, and to simplify the portfolio, I was wondering if it makes sense to dump it at this point?
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Old 03-21-2018, 10:01 AM   #4
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I just follow an allocation (percentage) model for my portfolio, and if things get more than about 3% out of range (up or down), I will rebalance. So in this case if you're below your desired range for RE, pick up some more. Maybe something else in your portfolio is above? In that case harvest those gains to put there.
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Old 03-21-2018, 10:14 AM   #5
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Sell it now that it has gone up off its low for the past 12 months.

Don't buy anymore until "LOL!'s Market Timing Newletter" announces a buy.
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Old 03-21-2018, 01:43 PM   #6
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I'd come up with an allocation plan, and stick with it. Timing & stock picking is not going to get you further ahead - not in the long run.
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Old 03-21-2018, 02:14 PM   #7
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IMHO a 1% holding isn't going to do much to move the needle one way or another.
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Old 03-21-2018, 02:23 PM   #8
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IMHO a 1% holding isn't going to do much to move the needle one way or another.
That's not humble opinion, that's math!
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Old 04-08-2018, 10:25 AM   #9
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IMHO a 1% holding isn't going to do much to move the needle one way or another.
But 15% in real estate certainly might.
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Old 04-08-2018, 10:37 AM   #10
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I'm too lazy to keep track of anything that is only 1%. I would dump it simply for that reason and, if I wanted that 1% real estate back I would increase some larger RE position.

Also, remember that any total US market fund will be holding REITs as well. VTSMX, for example, is about 3.5% in real estate. So 15% might be a low-side estimate of RE exposure. I'm not saying that is good or bad, nor am I saying anything about whether 15% is good or bad. I'm just pointing out the arithmetic.
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Old 04-08-2018, 04:25 PM   #11
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I have REITS. I like them. Sometimes on an ugly day in the stock market I am happy I own them. They do not always act in line with the Dow or SP500. I don't know what you should do regarding VNQ. It's hard to say. What I would do is keep it until a decision on it becomes clearer.

Maybe a few months from now a decision on it will be easier to make. In the meantime you can collect the quarterly dividends or let them reinvest.
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Old 04-08-2018, 06:09 PM   #12
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Quality REITs are good dividend machines. They are out of favor due to rising interest rates. If you can be a "contrarian" and buy up quality like O, WPC, VTR, etc. they are bargains. If your time horizon is long, buy/add and let them ride. If not, then avoid. I added because I plan to just DRIP over the next several years. It's always tough buying when everybody is running away. But, if you can stomach it, it usually pays off in the long term.
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