11 Reasons you should invest in REITs in 2018
A real estate investment trust (REIT) is a company that owns, and usually, operates income-producing real estate.
REITs own many types of commercial real estate ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands.
Some REITs also engage in financing real estate.
The REIT structure was designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks – allowing investors the opportunity to diversify in to multiple real estate investments.
Why should you invest in REITs
- Long-term performance : historically, they have provided long-term returns similar to the stocks
- Stable Dividends: Irrespective of market conditions, REITs have the proven record to produce stable income
- Easy Liquidity: Shares of publicly traded REITs are easily tradable on major stock exchanges
- Managed by Qualified people: The investment decisions are taken by the top professionals in the field who are the directors of the company. They are high qualified people. So, they help in reducing the risk of investments made on wrong property.
- Diversification: This is obvious. To reduce risk, this should be done. So, almost all REITs diversify their investments to counter attack the unexpected conditions of the market.
- Start with Less: REITs provide you the option to invest in smaller amount like $500 or $1000. You need to go through their structure to know about all the details.
- No need to think of repairs: For example, if you directly invest in real estate property, it is up to you to make any repairs to the property, solve tenants problems. Investing in REIT makes you free from all these. Though they collect some commissions on the whole, it saves a lot of time for you. As you know “Time is Money”
- Lower entry costs– REIT investors can invest in a fund for as little as $500 or $1,000. That can offset the costs of buying a property for six-figures, and having to pop down a hefty down payment.
- Increased liquidity– REITS are very much like stocks where you can sell shares whenever you like, just like a stock. Compare that to a home purchase, where liquidity is a bigger challenge, and is often dependent on fickle market conditions.
- No muss, no fuss– If you own a rental property, you are subjected to tenant complaints, late payments, broken appliances, and yard, driveway and home maintenance. Not so with REITS, which only require you track your investments on a reasonable and regular basis.
- Investment flexibility – With REITs, you have the option to flex your financial muscles and invest in commercial properties, shopping malls, even a marina or a group of camping site vacation homes – all at a reasonable entry price. That’s much harder to do as a direct investor where up-front capital can often be a challenge.
Investing in REITs 2018-2019
If you decide to invest in REITs, you still might want to diversify a bit.
There are many different REITs.
Some are general while others focus on specific task such as real estate involving health care businesses.
If you find a REIT which focuses on a certain industry, and you think that the industry is going to grow, you can piggyback off the REIT to invest in that industry.
What factors typically drive REIT earnings growth?
Growth in REIT earnings is typically generated by higher revenues, lower costs and new business opportunities.
The most immediate sources of revenue growth are higher rates of building occupancy and increased rents.
Additional property acquisition and development programs also create growth opportunities, provided the economic returns from these investments exceed the cost of financing.
What types of REITs are there?
REITs often are classified in one of two categories: equity or mortgage.
Equity REITs mostly own and operate income-producing real estate.
Mortgage REITs mostly lend money directly to real estate owners and operators or extend credit indirectly through the acquisition of loans or mortgage-backed securities.
Mintco Financial Independent Advisors
We at Mintco Financial Can Help You Understand:
- What is a REIT
- Benefits of Owning REITs
- Differences Between Traded & Non-Traded REITs
- Differences Between Public & Private REITs
REITs as an attractive addition to an investment portfolio – Including REITs in your investments can provide a way to realize the benefits of real estate while diversifying your portfolio beyond equity and fixed income securities. Our experienced advisors can help you determine whether including REITs in your investment strategy is right for you.
Call us at 716-565-1300 or 813-964-7100
Email us at info@mintcofinancial.com