There are several entities and markets in which to invest, especially in the U.S. Have you ever asked yourself, “Should I invest in real estate?” The American economic collapse of 2008 undoubtedly did a number on the real estate industry. However, things have gradually started to turn around, and many would argue that real estate is currently a buyer’s market.
So maybe the question isn’t “Should I invest in real estate,” but rather, “How do I go about investing in real estate?” Where does one begin in this process? One option to consider is an REIT. It’s good to know first, of course, why and how to invest in REITs.
What are REITs?
An REIT is an acronym for a Real Estate Investment Trust. These are companies that, much like mutual funds, allow investors to diversify their portfolios, resulting in consistent income streams from property, including commercial real estate. To put in even more simply, an REIT allows you to invest in real estate across the board by purchasing stock, just like you would if you were investing in a business.
Why Invest in REITs?
The main reason to invest in REITs is fairly obvious–to earn additional income! But there’s more advantages to REITs than simply the possible financial gains. What’s enticing about these trusts is that it allows you to easily invest in lucrative properties without the burden of purchasing real estate directly and in person. Like mutual funds, there is also less risk involved in diversifying your investment portfolio. So rather than putting all your eggs in one basket, you can distribute your hard-earned eggs in several baskets and reap the rewards.
How to Invest in REITs
To avoid making mistakes or getting buried underneath confusing paperwork, the first step to investing in an REIT should be to seek help from a financial advisor. These professionals will work with you to understand your investment goals and financial needs. From there, he/she will help you decide whether to invest in a stock exchange-listed REIT or through a REIT mutual fund.
Don’t let the term “real estate” scare you! It’s understandable that after the housing bubble burst eight years ago that some Americans still have reservations when it comes to investing in real estate. But the market is becoming stronger and stronger and more in favor of buyers every day. If you’re looking for ways to earn additional income or secure your future after retirement, REITs are a pretty safe bet.