Real estate investing has been a very popular method of building wealth over the years. Even though the real estate market has been struggling of late there are plenty of potential long term benefits and returns in real estate. REITs (Real Estate Investment Trusts) offer investors a different way of investing in real estate. REITs are securities that invest in real estate properties and mortgages, and offer investors the opportunity to buy shares on the exchange or in a REIT mutual fund. There are many advantages to investing in REITs, and we’ll discuss a few of them here.
No need to be a landlord
For a lot of people, the attraction of investing in real estate is there, but they don’t want to get involved in being a landlord. Being a landlord can be a lot of work that an investor may not want to deal with. Having to deal with tenants, collecting rent, and fix housing fixtures just doesn’t appeal to everyone, and for some it’s been a reason that they haven’t invested in real estate to this point. Sure, you can hire a property management group to manage your properties for you, but it’s still a responsibility that you have to take care of. REITs offer an ability to skip being a landlord but still get involved in the real estate market.
More liquidity
One of the advantages of real estate is that it forces you to save, and it’s partly because real estate is not a very liquid asset. Once you put your money into a property it can be fairly difficult to get it out. REITs offer you a way to invest in real estate and still keep your money readily available in case you decide to put it towards other interests or investments. Real estate returns without dealing with real estate agents, that’s a dream come true for some.
More diversification
Another advantage of REITs is that it allows you put your money into a variety of properties in a single stock or fund. If you invest in real estate the traditional way, it can take quite a bit of money up front for just one property. Your risk is especially high in those type of situations as you end up having a lot of your eggs in one basket. Contributing money to a REIT fund gives you a stake in multiple properties at one time, allowing you to mitigate a little of your risk.
Overall REITs provide a great opportunity in getting into real estate investing. If you’re not into real estate for the property ownership and potential rental income, then REITs might be your best option. The ease of use and liquidity make them an attractive option for investors, without having to wake up in the middle of the night to fix a leaky pipe.
