REITs stand for real estate investment trusts. These are real estate holding companies that issue stock. If you’re looking to invest in real estate but don’t want the hassle of identifying a piece of real estate to invest in, trying to unload that property, and waiting a long time, REITs are probably your best bet. They combine the qualities of stock investment with the potential value performance of real estate. Here are just key factors you might want to think about if you are looking into investing in real estate through REITs.
Traditional real estate investing is too burdensome
The main appeal of REITs is that they solve a lot of the traditional hassles of regular real estate investment. To make money in real estate, you have to pick the properties and the right location. You also have to buy at them at the right time and unload them at the right time. There are a lot of paperwork and time involved. Moreover, if you are getting into the real estate game, chances are your level of success would be mostly dictated by the country you’re in.
With REITs, you avoid all these headaches. First, REITs give you stock-action using real-estate assets. You can buy and sell REIT shares based on how the shares are performing in the market. Second, REITs are professionally managed so they buy real estate all over the place. You’re not limited by regional considerations. Moreover, there’s a lot more capital involved so the actual performance of the REITs can be quite big because you’re dealing with large blocks of real property.
Don’t lose sight of the traditional weaknesses of real estate investing
As much as REITs solve a lot of the traditional headaches of real estate investing, a lot of these weaknesses still remain. REITs often unload large blocks of real estate, and they often have to wait a long time. Second, there’s a lot of regulatory overside in the United States for real estate sales. Depending on where the piece of property is located, this can extend their timeline and can impact the quarterly performance of the REIT you’ve invested in. Moreover, you have to time your investment in real estate. The best way to make money in real estate is when prices are very low, and they’re starting to go up. You don’t want to buy at the top. Buying into a REIT doesn’t really fix this problem.