If you want to invest in real estate, there are low-cost alternatives to traditional real estate investments, and one of the most popular options is called a real estate investment trust. This is usually shortened to REIT, and it gives investors the ability to pool their money to invest in real estate. Essentially, this is a mutual fund for real estate investing. You might join hundreds or thousands of other investors, and professional investors at the trust will decide which properties to purchase. How can you invest in a real estate investment trust?
The Advantages Of Investing In A REIT
There are a few advantages of investing in a real estate investment trust. First, this can generate a stable source of income over many months or years, as the trust may decide to rent out some of their properties. Furthermore, this is a great way for you to diversify your investment portfolio. You can add real estate to your list of stocks and bonds. Finally, it doesn’t require a lot of money to get started. When compared to the down payment required for the purchase of a house, the minimum investment in a REIT is much lower.
The Types Of REITs
There are two separate types of REITs. The first is called an equity Real Estate Investment Trust. This is a trust that specializes in owning property. For example, a REIT that specializes in senior housing might own a variety of long-term care facilities, nursing homes, and senior living communities. The other type of Real Estate Investment Trust is a mortgage REIT. This is a company that invests in mortgage-related assets, including mortgage-backed securities. These companies usually borrow money at lower rates and use it to purchase mortgages at much higher rates, profiting on the difference.
How To Get Started With REITs
If you are interested in investing in real estate, you should explore some of the real estate investment trusts that are available. They all specialize in different areas, and they cater to people with different investment horizons. Consider the benefits and drawbacks of each option before getting started.
