How To Get In To Real Estate Investment Without A Lot Of Headache
Introduction
Perhaps you have wanted to get in to real estate investment but you’re coming up against one or both of the classic barriers to entry: time and money. Perhaps you don’t have time to fix toilets or chase after rents. Maybe you don’t have the wad of cash the bank wants as a down payment. You still want to get into real estate investment. What do you do?
Real Estate Investment Trusts
One of many ways to begin investing is to purchase shares in Real Estate Investment Trusts, also known as “reit”s. Reits are companies that only invest in real estate. When you invest in one, they are required to use your money for real estate investment. They can use it to buy real property, mortgages, or a mixture of both. They are also required to pay 90% of their taxable income back to the investors as dividends.
The Good
You know your money is going to be used for real estate investments. Real estate is one of the most stable investments around. As long as the company makes money, you get a return. Also, your investment is highly liquid. There quite a few reits that are publicly traded, so you can buy and sell them just like any stock.
It also helps you overcome the two barriers I mentioned above.
1) Time - The only real time you’ll need is the initial research before buying shares and occationally checking up to see if it is performing.
2) Money - Shares of reits can most often be purchased like regualr stocks. Your investment can be as small or as large as you want.
The Bad
Like any investment, there are risks. If you invest in a company that cannot manage the real estate you have helped it purchase, it will have no earnings to pass along to you. Even real estate companies can go bankrupt.
You may also want to consider that fact that you lose control of your money. If you make a real estate investment yourself, say you buy an apartment building, you can make adjustments, change rents, cut costs, and do whatever it takes to maximize your investment. In a real estate investment trust, you hand the reigns over to them.
Conclusion
Making a real estate investment using a reit can be profitable. It is also one of the easiest ways to get started investing. Just do your research before jump in.