A Real Estate Investment Trust (REIT) is a company that owns, acquires, and operates income-producing real estate assets.
A REIT is a type of security that invests in real estate through property or mortgage. REITs provide investors of all types with regular income streams and long-term capital appreciation.
REIT dividends provide a way for individual investors to earn a share of the income through commercial real estate ownership – without actually having to go out and buy assets.
The income-producing real estate owned by REIT may include mortgages or loans for assets such as:
- Resorts and hotels
- Shopping malls
- Office buildings, etc.
A real estate investment trust (REIT) is a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock.
Is REIT a Good Investment?
REITs can be good investments (or poor ones), but they’re not real estate investments per se.
You wouldn’t say that investing in a mutually funded aerospace is the equivalent to you building airplanes, would you? Or that investing in precious metals is equivalent to mining for gold?
REITs invest in particular forms of real estate.
Office buildings, apartment buildings, shopping centers, storage facilities, and so forth.
They invest in a lot of them and aim to provide investors with a rate of return on their investment. They’re required to pay out most of their income to the investors.
That doesn’t make REITS, as a whole, good or bad. REITs can be a good investment, depending upon factors such as:
- How well is your portfolio diversified?
- Dividend Producing Stocks
REITs are a percentage of a well-diversified portfolio including an emergency savings account of stocks and mutual funds, precious metals, etc.
Real estate investment trust (REIT) dividends are utilized as an investor’s portfolio in place of buying a rental property for real estate investment allocation.
REIT dividends are utilized along with dividend-producing stocks, treasury bills, and bonds as multiple streams of passive income for retirement and/or to have financial freedom.
Choosing The Right Types of REITs For Your Portfolio
Choosing the right types of REITs for your portfolio is as important. Think of it as choosing the right mutual funds for your investment.
Should you avoid mall REITs?
Although we can see malls starting to accelerate their pace, and pick up after the pandemic strike, there’s still no security in what might be. And with Amazon and other e-commerce companies taking more of the retail market.
Check some thoughts of “what might be”, we’ve shared our opinions in several texts:
LINK: Reasons for optimism in commercial real estate
LINK: The Future of Industrial Real Estate – What To Expect
REITs I personally like and support investing in are Public Storage, Offices and Homes for Rent, Science Facilities, etc.
How Does One Invest In REIT Stock
REITs can be good investments (or poor ones), but they’re not real estate investments. REIT, or real estate investment trusts, are businesses that own and operate real estate in order to generate profit.
Knowing that there are two main ways to invest in REIT Stocks.
You can either do it yourself (DIY) invest, and for this, you need to find an online brokerage firm that will accept you based on your country of residence.
This is easy if you live in some of the more developed countries.
Companies that manage portfolios of high-value real estate and mortgages are known as real estate investment trusts (REITs). They may, for example, lease properties and collect rent on them. The rent is then distributed to shareholders as income and dividends.
And for the end…
Unlike stocks and bonds, which have business cycles of a few years, REITs move in lockstep with the real estate market.
Notably, such movement tends to last for more than a decade, making it ideal for investors with a long-term investment horizon.
As a result, it is a profitable investment option for retirement planning.