Real estate and land are the world's oldest and most valuable resources for building and maintaining wealth, so investing in land is a no-brainer. However, if you want to flip a house, you'll have to pay an average of $252,100 just for the property you'll flip. If you want a rental income, you also have to buy the unit first.
That's where Real Estate Investment Trusts (REITs) come in. REITs are like small shares you can buy in a property or bundle of properties. Learn about investing in this way by reading this handy list of benefits.
1. Affordability
Most REITs trade for around $100 or less per share. These are the least expensive and most accessible assets for building a real estate portfolio.
If you don't have a massive cash flow, buying REITs is a far better alternative to saving than even a high-yield savings account. You can buy them and then incrementally build up a valuable real-estate-backed portfolio.
However, there are also some REITs worth tens of thousands of dollars. If this is the asset class you're considering, you may also be able to finance more traditional property investments.
2. Attractive Returns
REITs often post returns that outperform stock indexes, especially for long-term investments. They can also be used more flexibly than typical stock. This flexibility can allow you to experience higher-than-average compounding returns on your investment if you recapitalize the dividends.
3. Security
REITs are held secure by market and regulatory forces. On the market side, we know that land and interest in land will always hold value, which means these shares will never zero out and will also hold their value despite inflation.
On the regulatory side, the Securities and Exchange Commission (SEC) verifies the reliability of REIT companies. There are also laws to help them catch and prosecute fraudulent REIT sellers.
4. Liquidity
The high volume of demand for REITs as assets resulted in them being sold on national securities exchanges. This means that you can transform your REITs into cash any time you need to. You can also set up contracts to transfer REITs as payment for the other contracting party's performance.
5. Passive Income
Most REIT companies buy up residential or commercial real estate, split the ownership of the total mass of real estate into shares, and sell those shares as REITs. They then distribute the rental income of those properties in the form of dividends to their shareholders. Unlike most other savings mechanisms, you're guaranteed a passive income.
Buy Real Estate Investment Trusts (REITs) Today
If you don't have money to put towards a new property but still want to invest in real estate, consider investing in real estate investment trusts (REITs). REITs come with the same benefits as conventional property investments: storing value, posting great returns, passive income generation, and security. They're also the most affordable and liquid assets on the real estate market.
REITs are one of several ways to make money with real estate. If you want to learn more about generating a profit with property, peruse our list of services today and find out how to maximize your property investment.
