REAL ESTATE INVESTMENTS
1. REITS ( Real Estate Investments Trust )
Buying into REITs, short for real estate investment trusts, is one of the easiest ways we invest in real estate. Why? With a REIT, we invest in real estate without having to worry about maintaining or managing any physical buildings. REITs are companies that own real estate, anything from retail properties to apartment buildings, hotels, offices or warehouses. When we buy into a REIT, we purchase a share of these properties. It's a bit like investing in a mutual fund, only instead of stocks, a REIT deals with real estate. We earn money from a REIT in two ways: First, REITs make regular dividend payments to investors. Secondly, if the value of the REIT increases, we sell our investment for a profit. We invest in a REIT just as we would invest in a stock: REITs are listed on the major stock exchanges.
2. Benefits of Real Estate Investment
- LONG-TERM SECURITY - Real estate is a long-term investment, meaning you can hold it for several years as you wait for it to appreciate. At the same time, if you rent out your real estate you can earn monthly income while you wait for your property’s value to rise.
- PROTECTION AGAINST INFLATION - Real estate investments are considered protection against inflation. When the prices of goods and services are rising, home values and rents typically increase, too. Investment properties, then, can provide you with rising monthly income and appreciation to help protect you financially when the costs of everything else is going up, too.
- CHANCE TO BUILD CAPITAL - The big goal of real estate investing is to increase your cash, otherwise known as building capital. When you sell a property that has risen in value, you’ll boost your capital. The key, of course, is to invest in the right properties that will rise in value.
- ABILITY TO LEVERAGE FUNDS - When investing in real estate you probably can’t afford to buy properties in full. After all, that single-family home you plan to rent might cost $200,000 or more. That’s where leverage comes in. Leverage in real estate means you’re using other people’s money to purchase properties. In this case, you’ll take out loans from banks, mortgage lenders or credit unions and pay them back over time. allows you to add to your real estate holdings without spending the full amount of money you’d need to buy them on your own.
- DIVERSIFICATION - Adding real estate to your investments boosts your diversification, which can protect you in times of economic turmoil. Say certain stocks are suffering because of an economic downturn. The investment properties in your portfolio might still be increasing in value, protecting you from the losses your other investments are taking.