The Intelligent REIT Investor Guide

CHAPTER 14The Quest for Investment Value

“The combination of precise formulas with highly imprecise assumptions can be used to establish, or rather to justify, practically any value one wishes, however high, for a really outstanding issue … calculus [gives] speculation the deceptive guise of investment.”

—Ben Graham, The Intelligent Investor

This chapter is my personal favorite because it's all about being an intelligent REIT investor – the main theme behind everything I teach. I learned a lot from Ralph Block when I first read his Investing in REITs. In fact, it was his chapter on this subject that inspired me to make my own focus what it is today.

As we've discussed a few times now in a few different ways, successful REIT investing is a marathon, not a sprint. The intelligent REIT investor will buy quality merchandise at reasonable prices, usually holding on despite annoying volatility and the various commercial real estate cycles. At the same time, our long‐term returns will be higher if we add new stocks – the right stocks – to our portfolios and cull them occasionally too, taking advantage of overvalued or undervalued situations.

In other words, we want to apply something close to buy‐and‐hold, with intelligent caveats in place. That way, we're not unnecessarily bruised by developing trends, company missteps, and intense bouts of market volatility. Yet we don't allow ourselves to be blown about by every up and down either, buying in and out on short‐term emotions rather ...