Your honesty about your knowledge level is refreshing!
There are many kinds of reits, not all invest in commercial real estate. So you are correct with the current situation at the moment. However, the investment thesis is that the government will come in and backstop a lot of mortgages, as a way to prevent to whole industry from imploding. In that case, there will be an avoidance of bankruptcy. But the point is also about the future when the economy recovers, people will still need to rent, probably more than now, and when the payments start to come back, say 80% of the current rate, and you paid 70% off of that price, then when the price comes back, you are making a 25% +/- return annually on your original investment. The key is to put a small amount into the position, say 1% to 2% of your portfolio per position, so say 5%.
Then the future income in 2-3 years will be very nice as well as the capital gains.
sportsguy
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