Who wants to invest their savings into real estate investment trusts (REIT)? If you want to start investing in REITs, how should you go about choosing the best ones?
Investing in stocks has always been a good way to earn decent returns on your investments. But if you don’t know much about financial markets, investing in shares can seem intimidating.
That’s where REITs come in. These companies focus on real estate, which means they’re invested in properties such as shopping malls, hotels, office buildings, apartment complexes such as these apartments for rent in Garland, even casinos. They offer investors exposure to these assets at a lower cost than other options.
Investing in REITs offers several benefits over buying individual stocks or mutual funds. For one thing, because REITs are publicly traded, you’ll get access to dividend payouts. Dividends are cash paid out to shareholders, usually once per quarter.
This cash goes towards supporting operations and growth and also represents income tax deductions. Because REITs operate as partnerships, they are subject to special rules regarding dividends.
Top 10 Best Paying Jobs in Real Estate Investment Trusts (REIT)
A Real Estate Investment Trust or REIT is a company that invests in real estate and gives financial returns to the investors through its investments and other activities.
The stock market is flooded with a number of investment companies including banks, housing finance corporations, mutual funds, etc, but REIT has made it big. It is well known for its diversified portfolio, high dividend payout, liquidity, and tax benefits.
REITs are one of the best-paying jobs you can get into if you wish to have your own property investment business. While there may be many REITs out there, they all follow similar principles, so you will easily identify them based on what you see online.
If you want to invest in a REIT, make sure you invest through an experienced broker who can help you find the right ones to suit your needs.
There are 2 main types of REIT: Income Funds and Balanced Funds. Both types are suitable for any type of investor looking for a solid asset class. These are discussed below.
1. Income Funds
These are more focused on delivering income to fund owners. So, they tend to invest in higher-yielding real estate assets. You can either hold this directly or via ETFs and Mutual Funds.
Investing through these companies ensures you receive regular dividends from the income generated by the properties held. However, the amount of money you receive depends on the particular company you choose.
Also, as some REITs tend to rely heavily on one or two sectors, this means you might not reap great rewards every year.
As you choose different REITs based on your preferences, make sure you perform due diligence and research the different opportunities available.
Some REITs provide dividends for up to 40 years, while others only last around 3–5 years. Make sure you understand what to expect when it comes to dividends before you invest.
2. Balanced Funds
A balanced fund focuses less on generating income and more on minimizing risk. So, instead of relying on just one sector, it relies on various sectors within the real estate industry. In order to grow, these companies must maintain a balance between the value of their holdings.
This helps them generate long-term growth and provides stability during downturns. Additionally, since they do not charge high fees like some income funds, they allow longer-term investing without worrying about too much volatility.
When choosing a REIT, make the most of the opportunities provided by your broker. They should know every possible opportunity available and can guide you to the one that suits your situation perfectly.
Some brokers focus more on active management while others specialize in passive investments. Since each strategy requires different skills, ensure you pick someone specialized in what you need. Once you do, you will be able to reach your goals sooner.
3. Stocks
Another way to invest in the real estate market is by owning stocks. However, unlike REITs, you cannot buy shares directly. Instead, you must first open a brokerage account with a stock exchange such as NASDAQ or NYSE.
Then, you can trade shares you create yourself. It’s a good idea to start small and work your way up. Remember, you don’t need to completely reinvent your earnings. For example, you can keep 20% of what you earn as cash.
Even better, you could use the other 80% to purchase additional shares. The remaining 10% is reserved exclusively for future purchases. Once you become familiar with buying and selling shares, you can move forward by investing in stocks to achieve your financial ambitions.
4. Property Managers
This is often confused with Real Estate Agents. However, the difference lies in how they interact with clients. Whereas agents take care of everything related to property transactions (from finding homes to listing them), property managers simply act as a middleman between buyer and seller.
If you have been saving for a down payment, this option may help you get all of the benefits of homeownership without having to deal with the hassle. By taking care of everything associated with your transaction, you can focus on getting ready to settle into your new home.
Plus, if you have decided to sell your current house, you won’t have to spend time listing it and going through the process of placing an offer. That said, many people find managing property stressful.
Be prepared to put in plenty of hours if you want to enjoy the advantages of this investment strategy. Also, make sure you select a property manager who has experience dealing with buyers to avoid any potential headaches.
5. Commercial Properties
You can also invest in commercial properties. Like residential ones, these are made available at discounted prices to investors because of their steady demand.
These assets include office buildings, warehouses, shopping centers, retail stores, and so on. Just make sure that you choose a well-established company that deals with properties of similar types.
Otherwise, you might end up losing money. To increase your chances of success when investing in commercial properties, make sure you follow the advice from our article: How to Invest in Commercial Properties.
6. Private Equity
This is another method of investing in real estate. However, it differs greatly from mutual funds and REITs.
Unlike both of those options, private equity investments involve direct funding. As a result, you will receive returns based on an investor’s own performance rather than the company’s.
Additionally, you won’t have access to dividends. While private equity firms provide capital to struggling businesses, they expect something back in return. Your job is to identify the right opportunity and then manage it accordingly.
You will need to learn how to run a business before making this type of venture. Start by reading our article: 7 Steps To Making Money With Private Equity Investments.
7. Business Loans
Another common way to start investing in real estate is to borrow money from lenders. This includes loans given to individuals, credit unions, and banks. Typically, you will need to supply some collateral as a guarantee against the loan.
You will then use the proceeds to buy a fixer-upper or undeveloped lot. Once you have completed the project, you’ll be able to refinance the loan or sell the asset to repay the lender. The important thing to remember about borrowing money to invest in real estate is to ensure you do not overstep your means.
It’s easy to fall into debt when planning a long-term investment strategy like this one. If you need to borrow more than $25,000, consider putting aside the extra cash in savings instead.
Remember, you could lose all of your gains should you fail to pay off the loan. For more information on how to finance your dream real estate project, read our blog post: Financing Fixer-Uppers & Vacant Lots Using Home Mortgage Refinancing.
8. Rentals/Cooperative Housing
Buying a property to rent out to others is a great choice for anyone looking for passive income. There are two basic ways of buying rental housing:
Either become a landlord yourself or find someone else to buy the home first, such as an online realtor. Regardless of which approach you take, you’ll still need to purchase the home and complete any necessary renovations to turn it into a decent place to live.
The trick is finding a good building with a solid neighborhood reputation. After purchasing a property, you’ll have to renovate it and create tenant leases. Depending on what state you reside in, renter taxes may apply as well.
More information about renters’ tax liability is included in our full guide to renting out real estate.
9. Foreclosures
A foreclosure involves the legal process of selling a house that has been repossessed (taken away) by its owner.
This is usually done after a debtor default on his mortgage payments. Some borrowers are unable to keep up with mortgage payments, while others delay paying mortgages just because there are better opportunities elsewhere. In either case, once the bank takes possession of the property, it must auction it off within 90 days.
The goal is to get the best price possible, but if no interested parties come forward during that time frame, the bank may let the property sit empty. Be aware that foreclosures can carry substantial risks.
Investors who purchase properties in foreclosed townships often discover that many residents are unaware of their new status.
They are forced to move shortly after taking ownership of the homes, and sometimes even endure damage to their property. These troubles make foreclosures ideal for those with strong real estate backgrounds or extensive experience in renovation projects.
10. Construction
Many people enjoy building things for themselves or other people. If you know anything about construction, think of starting your own small contracting operation. You might build custom decks, houses, or barns, remodel existing structures or simply repair roofs on commercial buildings.
Before doing so, however, you’ll want to make sure that you understand local laws, licensing requirements, and insurance options. To get started, read up on the different types of contractors and contact local businesses and trade organizations.
Real Estate Investing Classified Ads. Below we’ve listed a number of categories where you can advertise real estate and related services without cost.
Our classified ads site allows homeowners, investors, brokers, agents, and service providers to quickly list their available properties, whether it be free listings, short sales, REO, bank-owned, or rentals. If you’re just beginning your search, you may want to begin with our beginner’s section to gain insight into the basics of real estate investing.
How REITs Work
The first thing to know about real estate investment trusts (REITs) is that they are an alternative form of investing in real estate. But unlike the stock market, which has stocks and bonds, there is only a single asset type traded — real estate. Instead of owning a piece of a company like Apple or Ford Motors, you own real estate.
The reason REITS work this way is due to federal securities laws. In order to comply with certain regulations that protect retail investors, the SEC requires that publicly-traded firms issue shares that represent an ownership interest in a specific property.
To meet these requirements, REITs are formed by corporations that pool together money from individual investors to buy properties. Then they sell off their interests in those properties to individuals who become owners. REITs raise capital for their projects primarily through selling stock, but also through debt financing.
Types of REITs
REITs have become increasingly popular among investors because they offer the potential to earn higher returns on equity than a traditional mutual fund. However, you must know how your REIT investment fits into your overall portfolio and avoid buying them if they don’t fit your needs.
It’s important to look closely at the industry your REIT invests in, your holdings and management, and the amount of risk involved before deciding whether it makes sense for your situation. Here’s what you need to consider:
Single-tenant — Some REITs specialize in just one type of property or industry. For example, a building owner will be part of one REIT, while another REIT owns commercial offices across the country. So you might want to see if one of these REITs meets your needs before trying to find others.
Multi-use — If you’ve got a large number of rental units to manage, a multi-use REIT may be right for you. Most multi-unit rentals are located in big cities or along major highways, but some smaller communities also have these types of properties.
With multi-use REITs, you gain the ability to diversify not only the property types you invest in but also the locations. Many people prefer to spread their resources around so they aren’t all focused on one city; thus, many REITs allow investing in both urban and rural areas. They also provide other perks such as lower operating costs because tenants pay less rent.
Private REITs — Private REITs are generally very small companies focused on managing just a few buildings. The main attraction of private REITs is that rents tend to be relatively low compared to public REITs offering similar products.
Additionally, private REITs usually focus on a particular type of property such as hotels or office complexes.
This allows investors to pick up better yields since the majority of their income comes from rental fees instead of mortgages, which means you can expect higher earnings. However, the downside is that these private REITs are more expensive to purchase than other options — typically costing over $100 per unit.
Pros and Cons of Investing in REITs
There are many ways to invest your money. One way is through real estate investment trusts (REITs), a type of fund that invests in property, such as shopping malls or apartment buildings.
There are many different kinds of REITs, including single-tenant, multi-use, and private. If you choose to get involved with REIT investments, you should do your research first. You’ll probably need to make sure the fund suits your goals, as well as your preferred location and size of the investment.
You should keep in mind that most REITs will charge an initial fee when you buy shares. But once you own them, you won’t have to worry about paying any extra maintenance fees. And if you sell, you will still benefit from capital gains tax.
You should always check the terms of each share before you buy. Your fund will specify the number of dividends that you receive, as well as interest rates. When choosing between different funds, you should look into how much risk you’re willing to take with your investment.
Final Words:
Best paying jobs in real estate investment trusts (REIT) consist of top management positions such as Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), and Vice President of Operations.
These roles require an excellent understanding of financial statements and accounting principles. Other finance-related job titles include Controller, Treasurer, Assistant Treasurer, and Risk Manager. General knowledge of REITs is helpful when applying for these top positions.
