Real estate can be a wise investment but beyond purchasing a home of your own, what is the best way to invest in real estate without getting your hands dirty and spending your spare time chasing tenants for rent? A REIT or Real Estate Investment Trust may be the perfect investment vehicle. REITs own, and often operate, real estate but are publicly traded like stock. Profit is paid as dividend to stock owners. To invest in a REIT, it is imperative that you do your homework. Real estate is a tangible asset, but there are major holding costs including maintenance, taxes and insurance. Local market conditions change dramatically and can take years to recuperate. Before investing in REITs research the following:
- Is the REIT registered with the SEC and publicly traded? Use caution before investing in an REIT that isn’t registered or publicly traded.
- Determine the type of REIT: equity, mortgage, hybrid?
- What type of property does the REIT invest in? What is the economic forecast related to that industry?
- Who is on the board and management team? What is their experience?
- How will it impact your taxes? Most REIT distributions are taxed as ordinary income.
Some well known and actively traded REIT’s include:
Boston Properties Inc. (BXP), Simon Property Group Inc. (SPG), and .