Invest in Real Estate using REITs

Author

Yan Carlos Ospina
December 30, 2022

Invest in Real Estate using REITs

Would you like to invest in real estate without owning physical properties? You can do this with REITs. Reits are a great way to invest in real estate without the hassle of being a landlord, finding tenants, collecting rent and everything else that comes with managing property. Instead, the company you invest in will take care of this for you. REITs can allow you to invest in both commercial and residential real estate.

REIT stands for real estate investment trust. A real estate investment trust is a company that owns or finances income-producing real estate. They may operate in many sectors including office REITs, healthcare, shopping malls, and more. When you invest in a REIT, you invest in a real estate company that takes care of all the work for you. By investing in a REIT, you become entitled to receive some of the company’s profits in the form of dividends, just like you would with any stock that pays dividends. Most REITs operate with an easy-to-understand business model. They lease space and receive the rent on their properties. The income generated is then paid out to shareholders as dividends. REITs are obligated to pay at least 90% of their taxable income to shareholders.

Due to steady income from dividends and long-term capital appreciation, REITs have historically provided competitive total returns. An investor can purchase shares of individual REITs, or they can purchase multiple REITs at once by investing in an ETF. Investing in an individual REIT is riskier because your money is invested in a single company. Investing in an ETF may provide more safety and consistent returns. An ETF is a basket of stocks or in this case, REITs that you can purchase at a single price and immediately gain exposure to hundreds of REITs. One benefit of investing in a real estate-focused ETF is that if a few companies have a poor performance, the others may make up for it by delivering a better performance thus resulting in a positive result for the investor.

Follow me on Twitter : yancarlosblendz

Reply

or to participate.