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The REIT: An alternative tool for investing in real estate

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One reason why many stay away from real estate investing, is because they fail to understand the variety of investment methods on offer. One fantastic tool that allows anyone to get involved in real estate investment is a REIT. This is a real estate investment trust that acts as a company. It directly operates commercial real estate, and investors are able to receive a portion of the income. Find out everything you need to know about the REIT, and learn more about the specific advantages it provides.

In basic terms, a REIT works in a similar manner to stocks. A company raises money through an IPO, and this is used to purchase or develop real estate. Rather than purchasing stock in a company, a REIT allows the investor to own a portion of the investment. This means they are able to gain a portion of the income that is generated through the property. Commercial space for rent in St Louis has a high potential ROI, which makes it a popular investment option for a company. There are three main types of REITs which are; equity REITS, mortgage REITs and hybrid REITs.

A key advantage of a REIT is that it allows investors to own a portion of a physical asset. Real estate tends to be stable, and a worthwhile investment in the long-term. Additionally, it tends to fare better against economic instability, whereas stocks can be more volatile. A participant of a REIT has a key stake in the asset whilst also benefiting from the regular income that is generated.

Another significant reason why REITs are popular is because they allow a variety of people direct entry into real estate investment. Typically, investing outright requires large amounts of capital. This can be a tough barrier to entry for many people. Moreover, a REIT usually involves multiple properties which leads to added diversification. This makes it less risky than owning one property, and only managing one asset.

REITs are required to send 90% of their yearly taxable income to holders. This means that investors can expect a consistent rate of return, and it provides a guarantee that funds will be received. This is in contrast to owning stocks, where dividend decisions are often made by the board.

It is vital to choose REITs which are diversified, and managed by those with years of experience. Factors such as funds from operation and cash available for distribution should also be considered. REITs are an interesting proposition that allow many people to get directly involved in real estate investment.

The REIT is clearly a real estate investment option that is worth considering. As with all investments, it is essential to do your own research and consult with a professional if necessary. If you want to learn more about warehouse space for rent in St. Louis or if you need to consider investing in commercial space for rent in St Louis, then feel free to get in touch with the Cardinal Realty Group. Call me, Harold Hanstein, on 636.225.0385 or send through an email to Hal(at)CardinalRealtyGroup(dotted)com.