REIT stands for Real Estate Investment Trusts. Instead of investing your money into the stock market, you are investing your money in a real estate company, through properties or mortgages. You, as the investor, receive tax benefits and high yields.
REITs were established and made available starting in 1960. REIT made it possible to expand investment opportunities to commercial properties when in the past; only the extremely wealthy were able to make such investments. When you invest in REITs, there are many different types of real estate properties that you can invest in.
If you are looking to invest in REITs, the REIT website is a great place to start. You can see what is being invested. You can also read how REITs work. A suggestion from their website explains that you should have diverse investments. You should not put all of your eggs in one basket. REITS is a reliable investment, according to the REITs website, “REITs paid investors approximately $18 billion in dividends in 2010.”
For the most part, REITs are a solid and steady investment. You don’t have to worry about inflation as much as other investments, especially if you invest in commercial properties. As inflation increases, so does the rent, so there is no concern of losing your investment compared to other investments such as various types of commodities.
Your return on investment is very steady and consistent, especially if you’re in it for the long term. Graphs starting in 1978 to 2010 indicate that your ROI is a positive indication or trend that your investment is in a good spot to grow.
I love the fact that when you make an investment in REITs, it provides you with a portfolio among other things that tells you what your investment is doing. REITs today are a 300 billion dollar market with an average daily exchange of 4 billion. While REITs primarily deal with commercial real estate, this gives the investor opportunity to derive and benefit from the rent being paid to these properties.
If you need a better understanding how taxes work with REITs, I would start by reading their websites and also hiring a financial advisor. If you were to invest in real estate property, there are many expenses to be weary of.
First, you have a mortgage with the bank including interest, property tax and insurance. The income is not produced currently. If you were to invest in a REIT, it is represented across a vast variety of properties, avoiding the all eggs in 1 basket predicament. If you’ve got the capital, this would be a great option for you. This would help avoid the hassle of property management, repairs and etc.
Ok sold! Now that I know that REITs is a great investment how do I get started? As mentioned earlier, hire an investment advisor and/or financial advisor. This will be to your advantage by utilizing their knowledge and expertise.