Episode Number: 229

Episode 229- An Introduction to REITS With Andre Albritton

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Jamila Souffrant 0:00

You're listening to the Journey To Launch Podcast: An Introduction To REITS, Real Estate Investment Trusts With Andre Albritton.

T-minus 10 seconds. Welcome to the Journey To Launch Podcast with your host, Jamila Souffrant. As a money expert who walks her talk, she helps brave Journeyers like you get out of debt, save, invest and build real wealth. Join her on the Journey To Launch to financial freedom in five, four, three, two, one.

Hey, Hey, Hey, Journeyers. Welcome to the Journey To Launch Podcast. As always, I'm excited that you are here with me today. And tuning in wherever you're tuning in from. I have a topic specific episode. By the way, if you're new around these parts, Journey To Launch, I do a lot of types of interviews. I do interviews where I'm, you know, mostly focusing on the guests and their journey, whether theirs is the entrepreneurship journey, or something really inspiring about their story. Whether it's paying off debt, and also I do topic specific episodes. So I love diving in to things like taxes, one on one, and cryptocurrency, which I've done in the past episode just on cryptocurrency and HSA, health savings accounts. And so this is gonna be one of those type of episodes where we're going to focus on REITS. Real Estate Investment Trusts. What they are. Why you should know about them. Why you should possibly add them to your investment portfolio. And so I'm gonna have Andre Albritton on the podcast to help break it all down for us. A little bit more about Andre. Andre is a graduate of Florida A&M University. He's become a recognized investing nerd who trains people on building wealth through stock market and REITS. He's the founder of The Millennials Next Door, a community dedicated to Millennials building wealth to create financial freedom. And he also has The Flavor Podcast. And so, I invited Andre on, because you'll hear in the intro, so I won't do it too much again, he came into the Money Launch Club to share more about REITS. He did a class just on REITS and I was like, "You know what, let's get this to the to the wider audience." So I hope you gain a lot from this conversation.

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If you want the episode show notes for this episode, go to journeytolaunch.com, or click the description of wherever you're listening to this episode. In the show notes, you'll get the transcribed version of the conversation, the links that we mentioned, and so much more. Also, whether you are An OG Journeyer or are brand new to the podcast, I've created a FREE Jumpstart Guide to help you on your financial freedom journey. It includes the top episodes to listen to, stages to go through to reach financial freedom, resources, and so much more. You can go to journeytolaunch.com/jumpstart to get your guide right now. Okay, let's hop to the episode.

All right. Hey, journeyers! Welcome to the Journey To Launch Podcast. I have a special guest, Andre Albritton, who is on the podcast to talk to us about something, you know, I was like put in my Journeyers on. I like educating myself about what we should know in investing. The different types of asset classes we should be looking at. And so Andre is going to talk to us all about REITs, Real Estate Investment Trusts, right, Andre?

Andre Albritton 4:45

That is correct. I'm here to talk about and excited to be on the show.

Jamila Souffrant 4:50

Yes. And so, I do want to just step back a little bit and explain, or give Andre some room to talk about where he's come from. You have the brand The Millennials Next Door

Andre Albritton 5:00

Yup.

Jamila Souffrant 5:01

And you also have a podcast The Flavor Podcast, right?

Andre Albritton 5:04

Yeah, you got it. Yeah, I'm trying to be like you, Jamila.

Jamila Souffrant 5:09

So, I know you from, like, on the online space and you know, you have Instagram that you're very educational on where you share about investing and an open book with your experience with investing and helping others. And I had to come into the Money Launch Club, which is actually going away. But we had to do a class in the Money Launch Club about REITS. And you did such a good job educating Money Launch Club Members on REITS that I was like, "You know what, let's bring this conversation to the wider Journeyer audience," because you're going to explain what it is. But I think and I know that this is one of those episodes where you're going to want to take notes. You're going to want to do some more research after, and I hope it introduces a lot of people or gets you comfortable with a new form or new asset class that you may not have been comfortable with before. So with that, Andre, can you just explain, I know I just gave like the really quick like what a REIT is, but can you explain what a REIT is?

Andre Albritton 6:06

Yeah, I can definitely do that. And you know, for me, I always have to be basic as possible. So basically, a REIT is honestly a landowner. They have tenants, just like you know, a regular land owner would have, but they kind of do on a bigger scale. So, Jamila, you were kinda in the classroom with me, so you should know these answers. So go ahead and tell me how, Pizza Hut, how do they make money?

Jamila Souffrant 6:30

I'm going to say similar to the way McDonald's makes money. The franchisee owns the land.

Andre Albritton 6:36

McDonald's is actually a little bit different. They're a little bit more into the real estate game. But for Pizza Hut, the majority of them, they make money, of course, through selling pizza. So a lot of times, they're not focused on the actual real estate, is when you have like a one individual, just kind of bought the franchise, he might not be willing to buy the whole building. So you know, oftentimes, they'll rent through the buildings, and there's one real estate investment trust company it's called EPR. They own several Pizza Huts throughout the country. There's another one called Postal Realty Trust. They own several post offices throughout the country. The next time you go into the United States Postal Service, those buildings, those are owned by someone else, and you know, bill the tenants for these suites. So at the end of the day, that's what they really are. It's just a landowner who owns specific types of buildings. So they might own hotels. They might own land. You have REITS that are just involved in timberland. So they own a bunch of forrests, and acres of trees. That's what they do for a living. And that's how they make their bread and butter.

Jamila Souffrant 7:34

Yeah. Okay. So this is really interesting. And the reason why I knew I wanted to bring this to the wider audience is because I have so many people interested in real estate investing. Who wants to own property, own real estate, and depending on where they are with their finances, or even located where in the in the market, sometimes it may be out of reach for them to buy property at the moment. But there's another way to invest in real estate, and that is through REITs. And so that's what I want to do now, is really just break down. Not only what a REIT is, but how one can invest in it? Why one should invest in it? and how you can start adding it to your portfolio. And I will just want to preface and say like, you know, so we're not financial advisors, you know, we always say, please do your due diligence and your research, but this will be a good jumping off point. So, Andre, why should people be interested in reading at all?

Andre Albritton 8:25

Okay, so I usually got three major reasons why people should be interested in REITs. And you can only name one of them, and that is the, I guess gonna say, diversification. So these whole REITs, they were created back in the 1960s by the government. The government, they kind of realized that most people don't have exposure to real estate. I don't know if you guys are like me, but I don't have like $20,000, $40,000 laying around my bank account, waiting to be spent on houses or something like that. So they created it back in the 1960s, and it's a great way to get real estate exposure without owning the actual real estate property. If you don't want to do anything tangible. I know, for me, I'm a very lazy investor. So it's okay for me to you feel me then. It's a nice way to own real estate without being a landowner, not gonna save up for the down payment, not having to worry about your tenants like tearing stuff up in the house or anything like that. So it's like, this is just nice and easy exposure. So that's one. The second one is, of course, I would say possibly the biggest one is the dividends for Real Estate Investment Trust Companies. These are just like regular companies on the stock market. And I always say if you can buy a share of Apple, Amazon, or wherever you are your buying stocks on, you can buy into REITS the same way. So they treat them just like stocks. We just call them REITs for other, different reasons. But for these companies, what really separates them is, in order for them to get this special tax filing. That means they don't pay taxes. They have to give 90% of their taxable income back to shareholders. So imagine we got ABC REIT. They make $100,000. $90,000 of that is going back to shareholders. Now, same situation for, let's say, Amazon. They make up to $100,000. They don't have to give that 100,000 back to shareholders. They can keep reinvested into the company, so on, and so on, so they can keep growing. But for these REITs, they're paying out those dividends easily. So that's like a huge reason why people like the dividends. And the last reason, this is like the nerdy side of me. I think, it's kind of no brainer sometimes. And by that, I mean, the REITS, though, like about maybe 10 different sectors. So it's easy to see what sectors might be growing soon. I mean, if you... honestly say if you have common sense, you probably already know what sectors you need to start investing into. And by that, I mean, last year, hotels were down, because no one was traveling. For me, I think there's an opportunity to say, "Hey, I'm gonna invest in some hotels. So the next time, when the economy does go up, those hotels gonna be, start making a lot more money down the road." So that's been one big push. I've been doing person my own portfolio. And, you know, like I said, these REITs, they're not that complicated. It's just easy understanding of the economy and the cycles.

Jamila Souffrant 11:15

Yeah. Okay. I love that you broke that down. So now, I will say this, so people don't think that I took your class and failed. My sister led that class. So I was not there for the whole thing. So. But, what I'm going to do here is because, you know, I like asking questions. I know some of these answers. But I want to ask questions, like, someone who's listening who has never heard of this before? Who is trying to get this down, right? And so I'm going to really ask some basic questions, and we're going to dive deep. And plus, you know, we want to hear more about you, Andre. So we'll get into that too. But first is this. You talked about different sectors and types of REITs? You kind of mentioned timber, hotels, apartments. So can you list some more, just like basically describe, like, it seems like it could be one sector and can REITs multiple cross sectors? Like, can you have a REIT that is invested in hotels and apartment buildings?

Andre Albritton 12:15

Yeah. So you can definitely have those type of REITs. They usually call them hybrid REITs. And this is just my two cents. I usually don't want to invest in hybrid REITs, just because that's a lot of, let's say, attention. The companies that pay attention to. It's like, they are doing apartments, and they'll join hotels. They have to keep looking in two whole different directions. And majority of times, these companies are rather small. So yeah, you can definitely do that with hybrid REITs. And just go through some of the major ones. I'll say, like two sentences on it. We have office REITs. So if you enter New York City, you see those high rises, all those companies inside them. Yeah, that's most likely owned by a Real Estate Investment Trust, actually, there's one called Empire State. They do a lot of buildings in New York, funny enough. We have Industrial REITs. That is like taking, industrial, is like, more of the warehouses. And so, like Amazon, you know, everyone has to store these items somewhere. And these big companies, they don't want to do it themselves. So they usually just kind of hire it out. And I'm not sure the date for this company, but they are going public soon. It's going to be a new REIT. And they're main strategy is just to buy warehouses that Amazon is using. So, okay, that's pretty interesting. I get it. We got the retail REITs. Retail, that's you know, for like your stores, your malls. So, Simon's Property Group, they own a lot of malls here. And, Jamila, that's kind of what goes back to the whole, I say, common sense. Alright, so a few years ago, malls are doing well, but now they're not doing as well as more demand comes, you know, from shaping. So it's like, okay, I might not be doing those type of mall REITs, because the industry is not doing well. And I think that's something that most people can see.

Jamila Souffrant 14:01

Right.

Andre Albritton 14:02

And then we got the hotel REITs. That's pretty self explanatory. We have residential REITs. These type of REITs, they own apartment complexes. I know one popular one that I stayed in was Camden. So they're like kind of, I think on the south eastern side of the United States. But yeah, they own a bunch of apartments. So that's what's good business. You got the health care they are involved in hospitals and senior homes. We have self storage REITs. Good chance, if you have ever put your stuff in like any of those like boxes. Or you have, like, the self storage like this big warehouse, it's probably one of those REITs. We have infrastructure REITS. This is more so towards the cell towers, which plays a big, big part in the whole 5g movement in autonomous vehicles. So that's pretty big there. And I'll go over two more ones. Um, we got data center REITs. They just hold pretty much data, like, these huge buildings that holds data for companies such as Facebook, State Farm, you know, a lot of companies have to keep the data for a certain period, and they don't want to do it all themselves. Totally get it, so they can focus on their own business. And the last one I mentioned is mortgage REITs. That one's pretty cool. Um, they just buy mortgages, and they make money based off of the interest. So they tried to buy mortgages for low, charge a little bit extra, and that little small profit margin. That's how they make their money.

Jamila Souffrant 15:23

Okay. All right. Love that you broke that down. Let me ask you another question here. So the REIT is the company that owns the property and land that you just mentioned in the sectors?

Andre Albritton 15:34

Yep. Correct.

Jamila Souffrant 15:36

When we, as a consumer, invest in a REIT, we are buying a piece of that company, like we're investing, or getting a share of the company? Or we're getting a share of their underlying property?

Andre Albritton 15:49

So we are getting a share of the company. I know some other ways you can actually buy into the properties, but those usually require a higher minimum. But yeah, just for this one, for the REITs though, just treat it just like stocks. So yeah, just get a piece of the company.

Jamila Souffrant 16:03

So, and I wanted to make that distinction, because there may be I know, you know, I talked about, okay, it's a way to own real estate. But technically, you're you're owning a piece of the company that owns the real estate.

Andre Albritton 16:13

Yeah, yeah. That's right. Yeah.

Jamila Souffrant 16:14

Right. How do you evaluate between the different opportunities in investing and REITs? Because I can, you know, assume if someone right now just says, "Okay, I'm interested. Let's go look at apartment REITs." and they put in apartment REITs, they're probably a bunch that pops up. So how does one evaluate what REIT they should look into investing in?

Andre Albritton 16:33

So funny enough that you mentioned that. Because yeah, I want it, I wish we could kind of go through all of it, but not too much. But um, you know, for REITs, one pro, I guess we will look at, is that there's not that many of them. According to REIT.com, that's a really good resource for these things where we can find all of them. There's 196 publicly traded REITs, and only so many of them have apartments. But usually what I would do is, one of the things I want to check out is how long has a REIT been around. So I like to kind of go back to the '07, '08 crash just to see how they did and just looking to be able to survive again. That's like a huge one for me. The other one is on something called a dividend yield. Basically, it's a financial ratio. It shows how much the company pays out in dividends each year, relative to its stocks price. So what I like to do is I'll find, maybe three apartment REITs. Now, I'm gonna start comparing them. If one of them's not inside that little bell shaped curve, like this one either pays too little or pays too much. I'm gonna do a little bit more research on that to see why it's a little bit more risky, why it's not paying as much. Because I want to make sure I'm choosing a pretty stable REIT. That's just my personal preference. But um, so those are like two of the major ones I'm used to looking at. And then of course, it just the industry. I think the industry has a lot to play with it. Usually I tell people, focus on maybe three different sectors. So for me, I like hotels. Hotels, they tend to go up and down the economy. And also like healthcare, because healthcare is pretty steady. You know, it's like this healthcare, it's not going anywhere, anytime soon, once we figure out the cure to life or anything like that. It's like, okay, maybe someone wants to invest in a growing market that's just going through the roof, and there'll be the infrastructure REITs. So those are the cell phone towers, have pretty much been tied to 5g. 5g is being tied to autonomous vehicles. So the payload, we can't have one without the other.

Jamila Souffrant 18:34

Yeah, yeah. Okay. So I love that you actually brought up the market crash. And you know, because you're investing in these companies, it's not only you're trusting in their ability to manage real estate and make smart real estate investment decisions. Now I do have a background in real estate, I actually have a master's in real estate.

Andre Albritton 18:51

Oh!

Jamila Souffrant 18:52

YAnd I went to NYU for a master's in real estate. And I worked before I left my job, that job was in real estate asset management for a top company, and I'm a large portfolio. So, it's important because I worked inside a company that was one of the largest holders of real estate. And you know, we managed property, we bought property, we did all of it. So what you're when you're buying into a REIT, it's also you're buying into that company's ability to choose the right investments. And to you know, whether they're leveraging and putting on debt, or give, or lending, to others to buy a property or buying property. You have to trust the management, or not trust, I should say you need to understand the management'e plan. What they consider proper resources or real estate projects and all these things. So it's really important that we look back at the crash, because now people will say we are in somewhat of a residential bubble. You know, I haven't been keeping up with the commercial markets as much lately, but I love that you just mentioned that because, that you let's see, what's this REIT around and how did they do with the last cycle?

Andre Albritton 20:01

No, and um, I'll mention two other quick things that people can look into. So the REITs, they want you to invest in them. So they used to make this information pretty easy to grab. So when you finally read, let's say, REIT, Dr. Evil Dre, of course. You can go ahead and put that into Google. And why does I look at management team. I'm looking at the President. Who handles the assets. I just look them up on LinkedIn. I just want to see that their history is consistent with what they're doing. If they're a new person, and they have no history and things like I'm stepping away from it. I can't trust them until then. And then you can also look up the portfolio. So, Jamila, you mentioned that you know, you have a real niche for like the real estate side. They'll show you the portfolio. Like I mentioned, that EPR company, they own a lot of AMC theaters, when AMC was kind of going down, possibly last year, I was getting a little bit skittish, so to say. Because it's like who is going to rent out some movie theaters? Like, if they go bankrupt, that's like their only client. You want to check out the portfolio as well. Use your common sense to say, "Okay, this industry is still thriving or it's declining."

Jamila Souffrant 21:09

Yeah, that's really some great insight. And are they expensive, like to buy? And are they Is there a range? I know, there probably is a huge range. But how hard is it for like the average person to get into this?

Andre Albritton 21:21

Not hard at all, like a lot of REITs, they'll still be down there as far as price. And you know, I always, I'm a big fan of fractional shares. So I mean, I know one REIT, I'm looking at some Apple Hospitality, they own several hotels about the United States. Their price as of August 4th is $14.36.

Jamila Souffrant 21:40

Per share?

Andre Albritton 21:41

Yeah, per share. So, no, it's easy to get into it. And you have some other ones like AMT, they're a big infrastructure REIT. I think it was like $280ish. But if you can't afford the full share, but you still want to get invested, I'll say take advantage of fractional shares. I mean, at the end of the day, half of the stock gonna be profit, more than none of the stock if you've never bought into it.

Jamila Souffrant 22:04

Right. And fractional shares is just what it sounds like you're buying a fraction of the share. So the next question then for someone who's like, "Alright, Andre, so this is something I want to possibly look into and get into." How do they get into this? How can you buy REITs? Now, you know, if you have access to like a 401k? Can you buy it through that? And I know that's going to be case by case depending on your provider? And also, how do you do it outside of retirement accounts?

Andre Albritton 22:31

Yes. So for the 401k, it will definitely depend on provider. I know, for my provider, we don't have too much say so. We will only really get like Target Date Mutual Funds. So that's them, it's like you pick aggressive, conservative, so on and so on. You don't get to pick which ones. Now, if you have a brokerage account, we have a Roth IRA or SEP IRA. Yeah, you can go ahead and just go in them. All you need is that ticker symbol, if that, you might just need to know the name of the company. And you can just go from there. Like for the REITs, you know, I can never stress this enough, because we call them REITs Still, I think most people think they're different from a regular stock, but it's the same thing. It's just the way that they'll categorize, categorized via taxes. But yeah, if you can buy shares of Tesla on Robinhood, you can buy REITs on Robinhood as well. They trade on the same type of market exchange.

Jamila Souffrant 23:20

Yes. And so is it taxed differently than a stock or similar?

Andre Albritton 23:25

Very similar. And you know, you bring up one of the cons, so to say.

Jamila Souffrant 23:29

Yes, let's get to that, too. We got to also show the other side.

Andre Albritton 23:33

Yeah, you know, there's always two sides to it. So, I'll say two major cons. One is the dividends. I know that's like a plus as well. But yeah, for the dividends, they are taxed as ordinary income. So people, pay your taxes that's all I can say.

Jamila Souffrant 23:49

Well, so, so I have a question about that. When you sell a stock you choose to not reinvest, just like if you sell a REIT, or you get the dividend from a REIT, and you choose not to reinvest and you pull it, that means you have to pay ordinary taxes on the gain.

Andre Albritton 24:04

Yeah. You still have the capital gains tax as well.

Jamila Souffrant 24:08

So you said ordinary and capital gains tax.

Andre Albritton 24:12

Yep.

Jamila Souffrant 24:12

So... and that's just important to note, because I know often, and even when I've had Teri Ijeoma who talks about just trading as a side hustle and an extra income and just anyone else who's talked about trading, is that yes, you're making money, but if you're pulling the money out, you, remember you have to pay taxes on that and set that aside.

Andre Albritton 24:32

No, um, definitely do that guys, because yeah, I know a lot of people who kind of forget to do that and they pull out everything. They forget they got taxes. So, just set a little bit aside. To me, it's not a big deal, because it's like, "Hey, I'm making some easy, free money. So it's okay yeah, take your 20% or whatever it is and yeah, call it a day. Give me the rest."

Jamila Souffrant 24:55

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And the last thing I want people to get discouraged about is like, I'm not gonna do this, because it's tax event. But like you said, like you, you have to make money for that tax event to happen. So it's like better to you know, make, let's say $10 versus $0 anyway. So don't be afraid. Like, yes, just make sure you're accounting for your taxes, and you're keeping up with it and always talk to your tax professional or accountant to help you with this.

Andre Albritton 26:46

Yeah, I mean, at the end of the day, it's really not free money, but easy money, so to say. So now I'm taking a look at my portfolio now. So far in dividends, this year, I'm still building my dividends up, I made $210. And that's just from owning stocks. So it's not a bad deal. Like, I'll check you. So the second con for REITs is if you are expecting growth, this is not the sector for you for most of the times. And by growth, I mean, you want to see your stock grow from let's say $10 to $50, within a year. For REITS, they are slow pace for the majority. I want to say data center, and infrastructure REITS. They are the exception to the wall so far. But for the majority of them, they'll play slow pace. And the reason why it's kind of one of the plus sides for them. So because they give 90% of taxable income back to shareholders growing at 10% to grow, they got 10% to pay all expenses for. Any bonuses, any new buildings, interest on the buildings. They got 10% to work with. So most of the times, you shouldn't expect too much wealth from these REITs, unless it's inside the infrastructure or data center sectors. Those sectors are growing a lot, but not paying a lot of dividends as well. So it's like a catch-22.

Jamila Souffrant 28:02

Got it. Got it. And is there another like con, or just something that people should be aware of?

Andre Albritton 28:07

Yeah. Man-- there's plenty of cons. Well, you know what I mean. I'll say the next one is interest. So REITs are very sensitive to interest, just like any other mortgage would be. So because in the past few years, we've been at record lows with interest rates, REITs have been doing really well. Yeah, if that does increase, then yeah, some of these companies they'll feel the hurt a little bit, because it's going to hit their profit margin more. Now, some companies, such as mortgage REITs, who make money off of mortgages... if they get higher interest rates, this kind of would do them a little bit bad, because that's how they make their bread and butter. We know like a hotel, if you have to pay more, if you have to pay more interest on it, that's gonna hit my profit margin a little bit more, and some expenses might not be able to pass on to consumers. So that's one thing that's always has the mark is interest rates while they go up or down.

Jamila Souffrant 28:58

Right. So there's a heavy correlation to REITs with that. And I mean, I'm glad that we're also talking about just like the other side, right? Like what you should be aware of when investing in REITs. So it sounds like, you know, apart from the positives of just being able to have a piece of a company that owns real estate. It's really diversification for your portfolio. Would you say like outside of the things you already listed as positives? It's like the diversification, diversification aspect of it?

Andre Albritton 29:27

Yeah, I would definitely say that. You know, I always want to make sure people understand like, when I was saying these things, you don't have to invest 100% of your money into REITs So like the way I break down my portfolio, I do 30% for index funds in long term companies. I do 30% for research, because I like the real estate exposure to it. And I'm 30% for trend investing, 10% for risky stuff like, bitcoins and etherium, stuff like that. So I just think is a good complement to any type of financial portfolio, whether you decide to do maybe 5%, 10%, 15%, 30% --that's a little bit too high, but I'm just like a REIT nerd. So I'm like that weird exception to the rule. But yeah, it's just great diversification, because last time I checked, real estate has been going up in this country, possibly since it was created, but definitely in the past few decades.

Jamila Souffrant 30:19

Yeah. Have you checked to see if REITs, you know, outperform, or have been outperforming over the long term, the stock market? I know it's a part of the stock market. But I'm just wondering because like for me, right? Like I'm a lazy investor. Meaning like, I will just literally put all my stuff in index funds until I'm ready to diversify out and be more conservative. Now, that's not to say that I'm not invested in other things. I've been exploring Bitcoin now. Or I shouldn't say Bitcoin, cryptocurrency and other areas, really. And now, you know, REITs. like it is something I am going to actively look at and see what I'm going to do. But sometimes, you know, it feels like, "Well, if I can just invest in an index funds that tracks the market, do I need to do any of the other stuff that's happening?" And so that might be a question for someone too. Like, do REITs outperform or not, and why take that extra step if you don't need to, if you feel comfortable with your investments, as-is now?

Andre Albritton 31:14

Right. So, let's go answer the outperforms. I did look up some numbers. This is coming from nareit.com, that's like the main source for REITs. Let's see... the last 10 years, the s&p 500, they did 14.2%. And for all equity REITs. So these are the public traded rates, they were 13.2%. The last five years was 12.5% for s&p. 9% for equity REITs. The last year, 2019, was 31.5% for s&p 500. 28.7% for the REIT side. And just kind of give like a bigger picture look, the last 25 years, s&p 500 is 11.9%. REITs are 12.6%. So I think people can always tell are they are usually kinda of in the same area, but i think the biggest plus is you get dividends on top of it.

Jamila Souffrant 32:06

Right?

Andre Albritton 32:07

So, the perfect example for how REITs really work is let's just imagine one week is $10. And over the course of 20 years, that $10 kind of keeps up with inflation. So maybe it's $40 down the road. So you get your money back, and then some, just to keep up with inflation, but that those 20 years, you got dividends along the way. So I think that's like one of the true differring points between it. But at the end of the day, you know, diversification is key, because who knows how long these REITs might last. Something bad might happenm but it happens, and at the end the day it's all a risk.

Jamila Souffrant 32:42

Yeah. Well, I'm glad you actually brought back the dividend conversation, because that is the differentiating factor between if you are, you know, it's you get higher dividends. um, investing in REITs, so Okay, wow, this, I feel like this was like a crash course on REITs, which is great. And there are people out here right now writing things down Googling and getting ready to do some due diligence on what they want to do and diversify their portfolio. Is there anything else we should know about REITs before we kind of get more into your story and how you got into investing and REITs and all the things?

Andre Albritton 33:13

Yeah, no, I would say the main thing to know about REITs is you guys just really want to sit down and take a look at the information. I promise like this whole crash course, you know, well more than most people know already. And when you just kind of think about the future, you know, I'm a big advocate for being proactive with your investments. You can say, "Okay, well, I think this sector is going to do well." then we are going to get into why you can, while it's cheap, and get the benefits.

Jamila Souffrant 33:40

Yes, yeah. So how did you get started in REITs and investing in general and start your brand Millennials Next Door?

Andre Albritton 33:47

Yeah, my brain honestly came from boredom. When I was working at State Farm, while I'm still working now, you know my jobs is very easy. So I didn't have nothing to do. I decided I want to go and try and do something in finances, because I thought I was good with money. But it turns out I'm just really cheap. Who knew? There's a big difference. But yeah, I started posting all this stuff. I was lonely, I was just studying for the Certified Financial Planner designation, and people really took a shine to it. That's like when my Instagram kind of came into play. Because, Jamila, before my Instagram was just nothing. It was boring. I mean, posting one or two pictures a month if that. So yeah, it was nice to get a lot of feedback from everyone. And when I worked in a financial planning firm, that's how I really got introduced to REITs. And you might have heard this too before growing up I'm sure a lot of people have, it was like always the indication that you need to own real estate to become wealthy. So let's say hey, buy these properties, hold onto the properties, you will be rich soon. Blah, blah, blah. And in this boom was like a few retirees but mainly executives who are making easy six figures. A lot of them only owned one house. Like no more than 20% of them owned more than one home. And that was just being very contradictions to what I was learning as I was growing up. So there's all these people invest in real estate, yes, I don't need to either? And then it turns out, they invest into these REITs instead. And that's how they get exposed to real estate and still make money off of it. They were doing like, mainly private REITs, and like, I think the minimum buy in was like $50,000, for them to even talk to you. So yeah, it's like, it was this way, like, I get a check for $50,000. Like, this is more than I'm make a year, easy. But that's how it goes and those type of environments. So that's how I got introduced, introduced to them. And ever since then, I just became a big nerd on it. No one else talks about them. I don't know why. I think they're so cool.

Jamila Souffrant 35:42

Yeah, well, that's the thing, because, you know, as much of the, you know, the, yes, there are some things you should be aware of, and some tax events and all that. But, you know, there seems to be a lot more good than what you should be cautious of when it comes to REITs. And so, and I don't hear a lot about it, in the personal finance space. Like I guess if I went deeper into the investing world, specifically, I would, but like in general, personal finance, you know, we stick to index funds, and the people who actually like to trade actively, you know, in, and we'll maybe touch upon it a little bit. But it did feel like, "Well, why aren't more people talking about this?" and you kind of, you know, I'm so glad you actually gave us that little context. When you worked at a financial planning company, it seems like, you like, I hear the same thing. And it's true. A lot of and most people's wealth come from real estate. Especially like the average person. You know, they, they were able to buy, or someone in a family was able to buy generations ago. That being able to accumulate and appreciate over time is up makes up a lot of people's net worth, right? And equity. So then, you know, I feel like a lot of us, which is not, nothing wrong with it, but we'll see the idea of what is an investor. And we have this idea of what that is. And we'll try to chase that. So we could emulate success. And there are so many loop now, I want to say loopholes, but it's not a secret, because we're talking about it now. But there's so many of these things that the wealthy do that are not putting as much energy, like maybe they don't want to be like land, like, they don't want to flip houses, they don't want to put their own money up as much in terms of active investing in real estate, but they're doing this other stuff that we don't know about, because we weren't exposed to it. Right?

Andre Albritton 37:23

No, no that's 100% true. I mean, because yeah, I know, for me, I'm always telling people like, "Hey, there's a lot of ways to make money." You don't have to own your own business, you don't have to own real estate. I mean, you can make money, however you want to make money. And I mean, my perfect example is I'm in a townhome now. I'm building a new home now, and I'm going to hopefully move into my next month. And people tell me to keep the townhome. I'm sorry, I don't really want to be a landowner. I mean, I'm gonna stick with my best things I'm good at and I'm just going to invest the money instead. Like I'm a better investor, than I am a landowner, at the end of the day, like, pure and simple.

Jamila Souffrant 37:59

And that's a revelation. That's something right there for someone, because while people are listening to this podcast, we'll get a bunch of ideas, because I like to introduce a lot of stuff and they're like, "Whoa, real estate, and then they're like, I don't want to own anything, I don't want to go through that." But self realization is really key here, because you are in the space technically, like all signs point to Andre should be able to like be, you know, multifamily family owner with his like experience and background. But you just don't want to do that. And, but there is another avenue and lane for you to do. Right and that other people can also possibly do now too.

Andre Albritton 38:34

No, self realization is key. And this is like a bad realization I had. But this is what led me to entrepreneurship. I forget when it was. But like one day, I just kind of realized I'm a bad employee. I am just not good at it. Like working hard for someone else. Some people are able to do that, which is fine, make a lot of money that way. But for me, it was never an idea. Like the ideal situation. So I said, "Okay, well, if I keep doing on this type of level, now pretty much into my job. I'm gonna keep making some really basic money and I won't be able to retire. So how can you start doing something to supplement my income." And I will just be working for myself. Because Yeah, the other side of it, Jamila, I was not doing that great at it. It was just like, just a little bit above average.

Jamila Souffrant 39:17

Well, when you know, now I want to kind of explore what you're doing professionally. Because you, you have a full time job, but you're not but you have kind of like the side hustle. I know you like you do things with your brand. And you're also investing and there are people listening right now who are in a job and they're like, "Listen, I'm not a good employee, either, but I don't have enough money to quit yet." So how did you decide? I mean, you said you were bored and you kind of seems like you followed what you were naturally interested in. But what's some advice you have for someone who's looking to also do something different or supplement what they're doing now?

Andre Albritton 39:54

Yeah, my my main advice, because this is possibly my third or fourth business, is just to do what you're good at, and follow your passion. And you know we always think the passion is like, people think finance is my passion. But I don't think it is. I think my passion is really just helping people. And I'm helping people through finances. So at the same time, I'm working my regular job, my nine to five, I'm a claims adjuster. I just like to help people, so I'm helping them by paying some checks, tell them about the insurance policy, because no one ever reads the policy. That's my, yeah, like, you just have to find your passion. It doesn't have to be something direct, like, "Hey, I always want to do a podcast!" I think it'd be something just very general, and maybe just want to get your voice out there. May want your name heard a little bit more. I say just follow your passion, keep at it, and don't get too high on yourself so to say. You know, people say you're doing a really good job, but then you look at your bills as "Okay, I might need to stay at my job still." And that's perfectly fine. Like, for mine, I don't think I'm going anywhere anytime soon.

Jamila Souffrant 40:57

And I was gonna ask you, what's your end game? Do you see you transitioning into your business full time, or you could like the balance of having that secure or steady paycheck, and then what you're doing now?

Andre Albritton 41:08

I definitely like balance. It was like maybe last week, I started to wonder if I'm actually somewhat retired already. I was listening to this conversation about FIRE. And a lot of times it's people not laying on the beach, versus doing what they want to do. And yeah, it's like, "Huh, I might be there now." Like, I'm able to still do my business, do my podcast, teach people how to invest in stocks and whatnot. And my job, I still like it enough to the point where it's, like, easy for me to do. And it's pretty laid back. It's not a lot of stress. I was like, "Huh, this might be my retirement, I don't know."

Jamila Souffrant 41:42

Well, you reached I mean, hello, you, you won the game. I always tell people this. Like if you found that you actually love what you do, you won and the fact that you're leveraging your skill sets in other areas, like you will never not be able to command income, because you're learning so much with the skills you have and leveraging that. And so I just encourage anyone to like really listen to this, like not everyone has to be a full time entrepreneur, you know, maybe Andre in a couple years, like it will just evolve to that for you. Who knows. But you don't have to rush into full time entrepreneurship if you don't have to. But I will say it sounds like Andre, your job is pretty relaxed too, like they don't mind. I don't know, I don't want to. It sounds like you can do both. And some people don't necessarily always feel like they can juggle or handle both either. So that's a that's a consideration we should just mention too.

Andre Albritton 42:32

No doubt and everyone is different. Just like personal finances is personal for a reason. What works well for me might not work well for you. What works well for you, I might look at it and just walk then walk off. Who knows.

Jamila Souffrant 42:46

Yeah, yeah. But it's just something to consider. You could very well, it's okay to like your job everyone. If you listening to this right now, you don't have to like rush into. Yeah. Or work your way into a job that you love. And then still gives you the room and flexibility to do stuff on the side if you show have the energy and wish to.

Andre Albritton 43:06

And, um, well a lot of people did, and what I noticed from the firm and from what other financial advisors tell me, is they say that for a lot of the clients who are wealthy, they're just good at their job, and they outsource their monies to other people are good at their job. So it's kind of the same with this one. I'm not good at probably owning real estate. So I'm gonna outsource that portion to someone who is good at it. Pay me some money off of it. And I'll be happy, because otherwise I'm not going to do it.

Jamila Souffrant 43:30

Yeah, yeah. Again, big part of this is self realization, know what you're good at. And sometimes that takes just trial and error to figure that out.

Andre Albritton 43:40

Yeah, I agree. 100%.

Jamila Souffrant 43:42

Okay, any last tips you learned from the wealthy while you were working with them that you want to share with us?

Andre Albritton 43:47

So this is one that I learned personally, but um, she's one of my favorite people out here in Atlanta. Her name is Wanda Potter I don't think she'll mind me sharing her name.

Jamila Souffrant 43:55

Say her name again.

Andre Albritton 43:57

Wanda Potter. She manages these huge accounts. Like, if you don't have like a million dollars to invest, she's gonna turn you away kind of deal. And from her discussing with me, she did like something a podcast with me too. A lot of wealthy, they do the same thing. And it's really about principals at the end of the day, like they live below their means. They make sure they contribute on a regular basis. We always think there's like, they're doing something else, like some secret deal, but they're really not. It's kinda the same thing. Like they can do what we can do, but they might do on a bigger scale. But at end of the day is the same thing. That the best thing you can do for yourself financially is just to get started now. Be consistent, save more, pay down more debt, invest more. It's like all the things you know you need to do, It's just about kind of doing them.

Jamila Souffrant 44:45

Doing it and don't worry about if you started too late, or if you don't have enough to start the process.

Andre Albritton 44:50

Yeah, like it's not complicated to be wealthy. It's like a true repeat the process you keep on doing over and over again.

Jamila Souffrant 44:57

Okay, this was amazing. Thank you so much, Andre for educating us on REITs and sharing more about just yourself. So tell everyone where they can find more about you and your podcast.

Andre Albritton 45:07

Yeah. So first off, thanks again for inviting me. I'm always down to talk about REITs. That's my thing. I'm on Instagram like any to Millennial, um, you guys can follow me @themillennialsnextdoo. You're gonna see all my links in up for that. And then the podcast is called The Flavor Podcast. Mainly on the we just talked about investing. So it's like investing in stocks, investing entrepreneurship, and real estate. And then every Monday, me, and um, Kevin Matthews, I think you just had him on.

Jamila Souffrant 45:32

Yep he was just on the podcast talking about the Tulsa Massacre.

Andre Albritton 45:36

Yup. So me and him, we do like something on every single Monday. We just talk about stocks. It's just a fun show for us. So, yeah, that's it, guys. Come on, and join.

Jamila Souffrant 45:45

Yes, and I will link all that in the episode show notes. Thank you so much again, Andre.

Andre Albritton 45:49

Thank you.

Jamila Souffrant 45:54

Alright, I hope you enjoyed that discussion with Andre and you learned something. So, REITs, are you going to invest in it? Are you going to add it to your portfolio, this type of investment? I hope this gave you a good starting point. As always, please do your own research, really, you know, take what you've learned here and take action. And like I say, this is a buffet. Think of the Journey To Launch Podcast, as a buffet of information. I have so much, I don't know, I don't know how people feel about their audience and their people. But here's one thing I know about Journeyers, and that's you, if you're listening to this podcast, and you follow my content. Is that you guys are smart. And I love that I can talk about different things. I can bring on a range of topics. And you can decide if something is for you or not. And I mean, I think that's the beauty of like this audience, you Journeyers, because giving you this information allows you to tap into and do things maybe you wouldn't normally do. It exposes you to something different. And this is just something I know I have faith in my audience that when you figure something is right for you, you do that due diligence and you make a decision and you move forward, and you give it a try. And so that's why I love talking about these different types of topics and introducing different things. And maybe you knew all about reads before, but hey, listen, that works too. And hopefully this can just maybe be a reintroduction to it. But if there's someone in your life where you want to share this information with, they need to understand and learn these things too, share this episode with them. Share the podcast with them. And I would love to hear if you learn something, or you're going to do something differently. When it comes to investing. Are you going to give REITs a try? Have you already been investing in REITs? Do you want to share with me how that's going tag me, @journeytolaunch on Instagram, Twitter and Facebook. If you're listening to this and you got something from it, I love, love, love to see your reactions on social media so I can respond and share it with everyone else. Again, I'm @journeytolaunch and if you want to tag Andre also, he's on Instagram as @themillennialsnextdoor, so tag us both if you're listening and tuning in and let us know so we can see what you thought of the episode.

Don't forget, you can get the episode show notes for this episode by going to journeytolaunch.com, or click the description of wherever you're listening to this and you can still grab your Jumpstart Guide for free to help you on your journey to financial freedom by going to journeytolaunch.com/jumpstart. If you want to support me and the podcast and love the free content and information that you get here, here are four ways that you can support me in the show: One, make sure you're subscribed to the podcast wherever you listen, whether that's Apple Podcasts, that purple app on your phone, your Android device, YouTube, Spotify, wherever it is that you happen to listen, just subscribe so you are not missing an episode. And if you're happening to listen to this and Apple Podcasts, rate, review and subscribe there. I appreciate and read every single review. Number two, follow me on my social media accounts. I'm @journeytolaunch on Facebook, Instagram, and Twitter. And I love, love, love, interacting with Journeyers there. Three, support and check out the sponsors of this show. If you hear something that interests you. Sponsors are the main ways we keep the podcast lights on here. So, show them some love for supporting your girl. Four, and last but not least, share this episode this podcast with a friend or family member or co worker, so that we can spread the message of Journey to Launch. Alright, that's it until next week. Keep on journeying Journeyers.

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Andre Albritton, founder of The Millennials Next Door and The Flavor Podcast, educates us on REITs, aka: Real Estate Investment Trusts. With the 2021 real estate market booming and millions of millennials looking to “get in” on the crest of the wave, Andre explains the ease of REITs and why they may be your foot in the door to investing in real estate without being a landlord or landowner.

In this episode we discuss what REITs, the tax ramifications of REITs, and if they’re the right real estate investment choice for you.

In this episode you’ll learn

  • What are REITs
  • The pros and cons of REITs
  • REITs v. Index Funds: Which has the best ROI over time?
  • Different sectors with the most growth in REITs + more

Watch this episode on youtube here.

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Other related blog posts/links mentioned in this episode:

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