It has long been said that the most valuable thing is land because “they aren’t making more of it” and who ever came up with that phrase hit the nail right on the head. As anyone who has tried to buy a house in recent years can tell you, real estate just keeps going up and up. However one problem with real estate (and being a landlord) is the cost of maintaining property. In fact when buying a house it is said that one should expect 1% of the house’s total value in keeping the property up. Not to mention having to pay property taxes and possible large HOA fees for some neighborhoods.
However what if there was a way to take the risk out of investing in property? Would it even be a more attractive investment, well there is just that and they are called Real Estate Investment Trusts, or REIT’s for short. Despite REIT’s becoming a hot topic in recent years they have actually been around for quite some time. Initially created by congress in 1960, REIT’s allow people to share in the profits from real estate without actually to deal with all the headaches that come with property ownership.
Also some REIT’s are actually traded on stock exchanges. However there are some rules but in all reality these are pretty stress free as well. Basically at least 75% of the corporations profits and asset have to be in real estate, and 90% of all income earned has to be passive income. Also it has to function like a mutual fund which means that it has no entity level tax rate.
REIT’s also have a fantastic return averaging just under 12% year over year return, which outpaces the S&P 500 by a couple of percentage points. Some REIT’s you can buy right now are, Boston Properties ($BXP), Realty Trust ($DLR), Equity Residential ($EQR) and Realty Income ($O). With ease of investment at great returns REIT’s a fantastic alternative to income properties.
DISCLAIMER: This is not to considered financial advice. I am not a investment, nor a financial advisement professional. Any investment decisions should be made and considered with one’s financial advisor. I hold no stake in any of the REIT’s that are listed.