Search

How to Invest in REITs: Strategies for Real Estate Investment

If you decided not to trade individual REIT stocks, you could find exchange-traded funds (ETF) or mutual fund that invests in a range of REITs for you.
How to Invest in REITs: Strategies for Real Estate Investment
It would take just a few minutes and you would be allowed to buy and sell REITs. Returns from REITs are relatively more than equity indexes and also help the diversification of the portfolio. Publicly traded REITs can be purchased and sold effortlessly.
In this article

Investing in REITs is as straightforward as opening a brokerage account. It would take just a few minutes, and you would be allowed to buy and sell REITs, just like stocks. REITs pay out enormous dividends. It is, therefore, advisable to use a tax-advantaged account like an IRA that would help you to postpone the distributions.

Notable advantages if you choose to invest in publicly traded REITs

Since REITs pay 90% of the annual income for shareholder dividends, they regularly provide the highest dividend yields in the stock market. Investors who want a consistent income at regular intervals choose reliable REITs because they have a proven track record for decades.

Returns from REITs are relatively more than equity indexes and also help the diversification of the portfolio. Publicly traded REITs can be purchased and sold effortlessly. You can avoid the paperwork and maintenance associated with commercial real estate.

REITs are not as volatile as traditional stocks partly owing to the fact that they pay more enormous dividends. Some investors use REITs for hedging. 

You may also like : A beginner’s guide to Exchange Traded Funds

The disadvantages 

While publicly traded REITs are simple to purchase and sell than literal real estate properties, non-traded REITs and private REITs must be patiently held for years to reap gains.

The legal status REITs have an abundant debt. They are always among the majority of indebted companies in the market. Investors, however, don’t face an issue because REITs generally possess long-term contracts (leases) that bring in consistent cash flow to meet out the debt payments and then make sure that dividends would be paid out.

Since REITs pay a bulk of the profits as dividends, they have to increase cash by providing new stock shares and bonds to grow. Moreover, investors would not buy them when there is a financial crisis. Thus, REITs might not be able to purchase real estate whenever they want to. 

REITs need not pay taxes, but investors should pay excessive amounts for the dividends they receive; however, a tax-advantaged account could avoid this and is considered an ideal fit for IRAs.

For Non-traded REITs, the cost for initial investment would be $25,000 or more usually restricted to accredited investors with notably higher fees than publicly-traded REITs.

You may also like : What to know before you invest in ETFs

Alternate options

If you decided not to trade individual REIT stocks, you could find exchange-traded funds (ETF) or mutual fund that invests in a range of REITs for you. It is less risky and provides immediate diversification. Today, several brokerages offer them. Moreover, investing in these funds is much simpler than finding individual REITs for investment.

Also Know: How to invest in REITs

Some online trading platforms that allow you to invest in real estate properties

  • iShares U.S. Real Estate ETF
  • Fidelity MSCI Real Estate Index ETF
  • Invesco Active U.S. Real Estate ETF
  • Real Estate Select Sector SPDR Fund
  • iShares Cohen and Steers REIT ETF

You may also like: How to File Taxes as a Real Estate Agent – Tips

REIT stocks that perform well

  • Safehold Inc.
  • Goodman Group
  • Innovative Industrial Properties Inc
  • Equinix Inc
  • Power REIT

Some REIT mutual funds you can consider

  • Principal Real Estate Securities Fd R-6
  • TIAA-CREF Real Estate Sec Advisor
  • PGIM US Real Estate Z
  • Cohen & Steers Real Estate Securities Z
  • Neuberger Berman Real Estate R6

Was this helpful?

Did you like the post or would you like to give some feedback? Let us know your opinion by clicking one of the buttons below!

👍👎
Richard Samuel

Richard Samuel

E Richard Samuel loves learning. From finding out the newest food in town to traveling and writing, he loves learning about everything. When he’s not writing, he’s probably trying to master the piano or watching food reviews.

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

Related Posts

Apps Like Vola Finance: Exploring Alternative Financial Solutions
Apps like Vola Finance – Top 10 Vola Finance alternatives
Discover alternative financial solutions that extend beyond Vola Finance. Let's learn more about Vola Finance, which provides various features, advantages, and innovative methods.
Profit and Loss Statement
Profit and Loss Statement
Examine the Profit and Loss (P&L) statement, a financial compass that navigates through sales, costs, and net profit or loss to decode a company's fiscal health.
Six Tips to Set Financial Goals in 2024
Every year, we all make a slew of resolutions that we follow for a few days before abandoning them. This time, let's set more practical financial goals to build confidence.
Build a Better Financial Future: Strategies and Tips
The pandemic has shown us the uncertainty of life and the importance of having a solid financial plan. Stepping into the New Year, it is important to start with a plan for your kid's financial future.
Tips to Improve Your Financial Health and Well-Being
The old year is fading away and the new year is set to begin. Have you set your financial goals? If you haven’t, let's do it together.
10 Financial New Year Resolutions for 2024
If you want to increase your income in line with inflation and fortify your personal finances against setbacks, these are the 10 financial goals to set and achieve in the coming year
Features
Essentials

Get up to $1,000 for emergencies

Send money to anyone in the US

Ger personalized financial insights

Monitor and grow credit score

Get up to 20% on everyday spends

Save up to 40% on car insurance

Get up to $1,000 for loss of income

Insure up to $1 Million

Coming Soon

File federal and state taxes at low cost

Quick estimate of your tax returns

Get up to $1,000 for emergencies

Send money to anyone in the US

Save big on auto insurance - compare quotes now!

Zip Code:
Zip Code: