Real estate is a popular choice for long-term investment. Real estate investment trusts (REITs) are particularly sought after by investors who are looking for passive investment. Obviously, it is not the only benefit that REIT investment has. Find out more about REIT investment benefits below!
Real estate investment trusts: the pros
According to Investor Junkie, the law restricts REITs to return 90% of their total income as dividends. While companies can raise how much they wish to return as dividends, they may not go lower than 90%. This becomes one of the main reasons people opt for REITs. Regular distributions of dividend also mean more chances for reinvestment.
REITs are comparably more flexible and convenient than owning a real estate. Investing in REITs cost much less than owning a real estate. REITs open the door for those who are looking for real estate asset class but have a limited budget or capital. Furthermore, REITs shares are more liquid, meaning you can easily buy and sell them. Thus, REITs investment overall is less risky than owning real estate.
REITs are pretty much like mutual funds, hence it is a passive investment. Those who invest in REITs do not need to run around looking and managing for properties and tenants. Despite its similarity, REITs are rarely affected by other asset classes. Instead, Investor Junkie noted that at times, REITs can even outperform other stocks when the economy goes slow.
These are several advantages you can get through REIT investment. However, don’t get blinded by the advantages. Make sure you learn thoroughly about REIT before actually investing in one.
Read also: Real Estate Investment Trusts (REITs): How It Works
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