Hello, readers! Getting technical with more and more real estate now, aren't we?!
I hope you're having fun reading this as much as I write it-- trust me
it only gets better. Knowledge is definitely power, baby! Okay. For
today, I'll be posting more real estate jargon of which I hope you
don't mind. After all, you're reading my blog. I guess it's okay? :)
So. You have money. You want to invest in real estate. You can’t handle being a landlord nor could you afford to build a whole apartment complex or mall strip. What do you do? Where do you put your money?
A lot of people believe in the value and benefits of investing in real estate. After all, real estate is one industry that never runs out of a market. It is not a trend, it is not something that comes and goes, and it is not something that easily depreciates. When the circumstances are ideal, a real estate property takes about 40 years before any significant depreciation occurs. And that is even correctable considering a good amount of maintenance, repairs and upgrades are all it takes to keep the property from depreciating.
Someone somewhere will always be in need of a house to live, or a place for his business. But directly investing in real estate – renting out apartments, building houses to sell for later, or building huge commercial or retail complexes are a ton of work and requires a lot of money too. When you want to invest in real estate but you want to avoid having to give out monthly rental bills to tenants or maintaining the upkeep of the building yourself, then perhaps investing in REITs (read as ‘reets’ as in ‘streets’) may be the thing for you.
What are REITs
My previous article explained REIT briefly, so now, I'm going to try and explain it in full. REIT or Real Estate Investment Trust are securities that are practically in every way similar to stocks but are invested in real estate projects or mortgages. REITs are the best indirect and passive way to invest and earn in real estate.
Commonly, REITs only invest in one type of real estate at a time. The more popular ones are those in the commercial real estate, retail real estate and residential-- whether marketing rental property or owned-- real estate. While they do exist, REITs investing in different types of real estate are not common.
Why You Should Invest in REITs
As has been mentioned earlier, REIT is the best investment for people who are looking to invest in real estate but do not have the time and energy to do so. See, directly investing like building or renting out your real estate property requires you to be there – dedicatedly – and take care of everything firsthand.
REITs, on the other hand, are practically stocks that invest in real estate so all you do is take care of your stocks and hope that your real estate company does all the work. Done right, it could fairly well give back your investment in a short period of time.
Because these are large companies with equally large real property investments, the payout is more than likely to be just as huge.
Risks in REITs
The risks in REIT investments come mainly from the fact that you have no control over it – just as with any other stocks on the market are. While directly investing gives you a chance for a better turnout of your investment, with REIT, everything is in the hands of the company. But since you know you are investing on stocks, you more than likely have known this.
More interesting real estate stuff soon, wait for it!