Are public REITs actually cheap right now, or just down from a peak
Take an investor five years into a service business, finally sitting on 60k that is not reserve money. Skip the rental for now, tenants are a real learning curve, and public REITs are worth a serious look instead. The common claim right now is that REIT valuations sit near historic discounts and the gap to private real estate pricing is the widest it has been in a couple of decades. The claim is worth taking seriously, but down 30 percent from a peak is not the same thing as cheap, and treating them as identical is a common mistake. Every piece that calls REITs cheap also flags interest rate sensitivity as the risk, which can read like the same point stated twice, though it is not: pricing relative to history and forward sensitivity to rates are separate questions worth separating. On deploying 60k: a lump sum into the sector historically outperforms a drip more often than not, but splitting it over twelve monthly buys of 5k trades some expected return for less regret risk, and that is a legitimate tradeoff rather than a mistake. On price to FFO instead of price to earnings: REITs get their own multiple because depreciation distorts GAAP earnings for an asset class built on holding real property, so funds from operations adds depreciation back and gives a cleaner read on operating performance. A normal range varies by property type and rate environment, so it is worth comparing a REIT's current multiple to its own history and to close peers rather than to a single universal number.
