As you know, I love real estate investing. Because of my investments, I've been able to generate income streams far beyond what would have happened had I invested in stocks. Plus, I my properties appreciate year over year. That said, not everyone is meant to buy to flip or for rentals. That's why I want to discuss with you the idea of real estate investing through real estate investment trusts (REIT).
An REIT is similar in many ways to a stock fund. An REIT is traded like a stock and allows investors to be involved in real estate purchases that would otherwise be out of their reach, such as commercial shopping centers.
Why an REIT?
Although real estate investing is great for those that want to participate, I've told you before that it is a lot of hard work. Investing in an REIT removes some of that work. Here are a few things removed from REIT investing:
· Vacancy risks
· Maintenance expenses
· Management hassles and time
An REIT is an investment vehicle that owns real estate and distributes dividends to the shareholders. So, although someone is dealing with the various risks and expenses, it is not you directly. This is a much more passive way to be involved in real estate investment.
A Variety of REITs
When it comes to REITs, there are many different kinds to choose from. Although a few are diversified, investing in a wide variety of property types, most are specialized. Here are some you could consider:
· Retail: Includes, malls, outlets, shopping centers, and free standing units. Some retail REITs specialize, while others deal with many different retail spaces.
· Residential: Although this is typically apartments, these REITs can also be single-familyhomes. This REIT segment is more recession-prone than others.
· Office/Industrial: Office buildings, warehouses, distribution centers, and factories. This is more recession-proof due to long leases.
· Hotels: Hotels, motels, and extended stay facilities. Due to high turnover, these are very recession-prone.
· Healthcare: Senior living communities, hospitals, medical office buildings, and skilled nursing facilities. Less volatile REITs are those with private-pay revenue sources rather than government pay sources.
· Data Centers: Data storage facilities and cloud data storage. This is a growing sector.
· Self-Storage
· Recreational Properties
· Timberlands
· Billboards
Whatever level of risk you wish to take, you can find an REIT that meets those needs.
REITs can produce a good stream of income over time as property values increase. Many REITs have very strong market-beating returns, some well over 12%. If you'd like to learn more about real estate investing through REITs, feel free to reach out to me on steemit.chat or in the comments.
Huge fan of REITS myself. Couple of things to round out your article. REITs returns are classed as income and will be added to your income statement - good for some/ not good for others. Unlike dividends REITs HAVE to pay out a percentage of their rental income - in SA it's 75%. Lastly, it's a good way to get property exposure/income from another country - for me, have been investing in Eastern Europe - fav being Poland.
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