Long-time investors will know that mortgage REITs are required by law to empty give back a minimum of more than 89% of their income to their shareholders. This means that shareholders who accumulate positions over time are able to participate in the income of the corporation over time. Prominent investors will also know that mortgage REITs have their own benefits such as being able to provide investors with a larger slice of the dividend pie due to the way they are set up. Of course, not everything is rosy in this particular investment vehicle. Investors will have to make sure they understand the risks of investing in a mortgage REIT.
For instance, mortgage REITs are able to make money through the origination of mortgages, the acquisition of mortgages, MBS products, and other financial products related to mortgages. Certain issues in regard to interest rate changes and other issues that may take place in housing may affect the profits and the firm in a disadvantageous fashion. For instance, a REIT may have its acquisitions or its assets decrease in value when interest rates experience an increase. They may also see a decline in some of their assets if interest rates decrease and if mortgages are prematurely finalized. Concerns that may also arise may be present in the types of mortgages that are chosen by the managers of the firm, sub-prime mortgages may see higher chances of failure and this has to priced in and accounted for to have long-term success.
Managers without the necessary experience may not be able to weather the different storms and changes issued by the Federal Reserve. As such, it is wise for investors to turn to a solid team such as the one led by Michael Nierenberg and his team at New Residential Investment Corporation. Michael Nierenberg and his team have the correct experience and knowledge in the housing market to navigate the variety of tempests that may be present in the volatile markets. Learn more about why Michael Nierenberg and his team have the knowledge to provide individuals with the right returns in a variety of different market climates and how they have fared in the past. They have conducted the right preparation for different interest rate changes that may be taking place in the markets in the present and in the future as well.