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(04-10-2015, 06:27 PM)hendi_alex Wrote: To me the main problem/headwind lies in financing costs. As those costs increase, REITs will lose margin and cash flow. IMO that aspect is not noise. My approach will be to slowly accumulate over varios cycles. There is no compelling reason to go full pool during what is the most favorable part of the cycle, a time when yields are historically low on the strongest REITs.

What you say about REITs and margins is relevant to mortgage REITs but not equity REITs. In a rising rate environment, equity REITs typically prosper because rising rates are the result of increased economic activity, which is all to the good for these. Additionally, equity REITs use mostly fixed rate financing, so rising rates will have little negative financing expense effect on them.

For these reasons, I have one mortgage REIT in this portfolio but a lot more than one equity REIT.