When we talk about real estate investment, most people might think of renting or selling properties. However, some people find investment strategies that involve property ownership bothersome. Though, it does not mean there is no real estate investment strategy that such people can choose. Try real estate investment trusts!
Real estate investment trusts (REITs) first started in 1960 and has been receiving a lot of people’s interest since. By offering the most attractive features of stock investing, REITs have become investors’ alternative to purchasing real estate.
REITs are also a great choice to balance an investor’s portfolio. Stocks generally do not bring significant effect to real estate investments. Hence, while stocks decline hard, real estate typically survives. According to Investor Junkie, financial advisors also advice to settle 10-26% of the overall investments for real estate.
REITs work like market stocks. It compiles real estate-related assets such as residential, commercial, industrial or agriculture real estate. It may also include storage units, mortgages, malls or a mix of investments. When you invest in REITs, you invest through companies that own and operate properties to generate profits. The shares you own represent that you own a fair share of the real estate company. The income and profits from property sales will thus come back to you. According to Investor Junkie, the law regulates REITs to distribute 90% of their annual profits.
More about REITs (Real Estate Investment Trusts)
REITs become a popular alternative between investors because of its reasonable price. Owning property costs a lot of money. Aside from purchasing one, the owner needs to manage the property. Not to mention additional fees for administration. Hence, people who have limited capital for direct investment, REITs become one of the most sought after investment. Though the minimum investment depends on each investment company, some companies only ask for $1,000 as the minimum.
Take into considerations that REITs consist of traded and non-traded REITs. While traded REITs are easier to buy and sell like stocks, they are often more liquid. Thus, several instances may affect the REITs price.
There are several categories and geographical regions that investor can choose in REITs. Noted from Investor Junkie, several categories that investors can choose range from industrial and office, retail, residential, lodgings and resorts, health care, self-storage until specialty.