Investing in REITs

Real

Estate

Investment

Trust

This is what a R.E.I.T. stands for and most consumers and investors have no idea that they even exist. It is very common to find people flipping houses, buying rental properties, and renovating their own home, but did you know you can invest in million and billion dollar real estate portfolios?

While there is nothing wrong with buying houses in Pittsburgh, this is a very hands on approach. It requires management, financing, proper construction management, and of course finding a great deal. This is not possible for everyone who wants to become an investor. For people who might have a more analytical background as opposed to construction, this might not be the best fit. Also, many people are busy 24/7 and have absolutely no time to find properties and visit construction sites all week.

A great option for these investors can be a REIT. A real estate investment trust is a company that owns and operates larger commercial assets. These might be hundreds of apartment buildings, large retail locations in the city, or massive commercial office buildings. As an investor you get an equity state in this venture based off the investment you make. It is buying shares in the company through the stock market in most cases.

You as an investor reap the benefits of the companies value hopefully appreciating overtime just like a local investor's business, as well as dividend payments as a shareholder. This is the percentage of profits you reap for your ownership stake in the REIT. The best part about this investment option, is it is liquid and you do not hold any liabilities. If the company defaults on their debts you are not personally liable. When you invest in a property and get the loan from a bank, you are liable for that debt. Also, you can cash out of your shares in the REIT at anytime while the markets are open. If you wish to sell a property it may take months and require thousands of extra money in marketing costs or renovations to pass inspections.

There are countless ways to invest in real estate and there is an option to fit each individual's need. A REIT can be a great way to passively invest in the real estate market without all the liabilities. If this is an investment vehicle that seems to fit your needs, find a professional financial advisor that specializes in these investments like Sterling Heights Financial Group to assist you in this process.