Why was my first dividend lower than I expected?
As a Growth REIT investor, your returns will manifest in two forms:
Dividends are the profit generated from incoming rents. REIT investors receive a dividend every month from the rents that are collected. That dividend is automatically reinvested in order to fund the renovation of the properties.
Dividends are posted by the 15th of every month. If your investment cleared escrow this month, you will see your first dividend next month. If, for example, your investment cleared escrow in January, you will see your first dividend for the month of January posted by February 15th. Keep in mind that your first dividend is always prorated based on the number of days you were invested for the month. This means that if your investment cleared escrow near the end of the month, your first dividend may be on the lower side because you were only invested in the REIT for a few days.
It’s important to remember that the dividend does not represent your full return, only the cash flow from incoming rents. It doesn’t factor in the appreciation of the assets that happens over an extended period of time.
In real estate, appreciation refers to the increase in the value of a specific property. Your returns will come from both dividends and appreciation. Appreciation represents a far more substantial portion of the investor’s return.
The assets will appreciate both naturally over time and through forced appreciation via the renovations.