Beware the Bergscrund
This website was born out of excitement and frustration. Excitement at the incredible investment potential of Real Estate Investment Trusts (REITs) and their unfolding story. Frustration that the investment industry has failed, for the most part, to explain to the average consumer the benefits of REIT ownership.
I suppose this story begins in high school where my geography teacher, an avid climber would regale us with stories of his adventures. His knowledge and experience were impressive. While other teachers would tell us, “Don’t do drugs or drink” our alpine enthusiast would warn “Kids, always beware of bergscrunds”. Bergscrunds or “scrunds” for short are particularly nasty crevasses that form at the head of glaciers where they join mountains. To the casual observer the terrain looks like one, continuous surface, but at this junction of ice and rock lurk crevasses that can plunge over 300 feet deep. Fall down one of these and you’re literally between a rock and a hard place. “Beware the bergscrunds” became a running joke between my classmates. It wasn’t until adulthood, when I began exploring REITs that I discovered a bergscrund of mammoth proportions between the real estate and investment professions.
Most of my career has been a path weaving between adult education, financial services and real estate. I have previously served as a life insurance and mutual fund advisor before dedicating my passion to adult professional education. I am a teacher and instructional designer and for the last fifteen years my full-time job has been developing and delivering continuing education for Realtors and financial professionals. It didn’t take long for me to catch the irrepressible enthusiasm of real estate and financial advisors for the potential benefits of the services and products they offer. But as fond of them as I am, I am frustrated by the average Realtor and financial advisor’s inability to help the average consumer traverse the knowledge gap between direct ownership in real property and indirect ownership in real estate. By way of disclosure, I own real estate through direct ownership in my home and a rental unit and through indirect ownership in funds, including REITs.
You would imagine that someone in my position of serving the financial industry would have no difficulty finding consumer-friendly investment information about REITs but nothing could be further from the truth. In 2004 when I began researching REITs for my personal investing, the industry here in Canada was ill-prepared to serve consumers directly. Although I am Canadian, I read American books on REITs and visited the National Association of Real Estate Investment Trust’s website. It is not surprising that Canada’s recent run-up in REIT ownership was driven largely by institutional advisors and sophisticated financial advisors making recommendations to their clients. In my opinion, despite their incredible potential, REITs have failed to capture the imagination of the average investor…so far. It is my hope that as I explore REITs, I can help investors worldwide to learn. I am not a professional advisor (see disclaimer); I am an educator and fellow mountain climber. I expect to make mistakes and I hope to learn from experts and share what I learn.