Whether you’re a new investor or an experienced one looking for some new ideas, there is always real estate property. However, since not everybody has the money and resources to buy properties, get them fixed up, find tenants or try to resell them, there is a simpler solution: REITs. Real Estate Investment Trusts, for many people, is the best way to buy investment property.
Instead of buying commercial or personal properties on your own, you invest in companies that own multiple properties and (hopefully) earn some profits from them. Of course, just like any other type of investment, REITs have their pros and cons. However, they’re generally considered safer for beginners than different types of real estate investments.
As of right now, in 2021, there is no corporate tax involved with Real Estate Investment Trusts, as they get a big tax advantage as long as they meet strict requirements. Also, there are high-dividend yields since REITs must pay a high percentage of taxable income to shareholders. As a result, it’s not uncommon at all for them to have a safe dividend yield of 5% or higher, which is over twice the yield on the average stock on the S&P 500 Index.
One of the main reasons REITs are often thought of as the best way to buy investment property is the total return potential. Real estate values are known to increase over time. The REIT company has the tools, resources, and strategies on hand to continuously create additional value. Some focus more on developing properties from the ground up. In contrast, others are more interested in selling valuable properties in various real estate sectors and redeploying the capital.
Portfolio diversification and access to commercial real estate (offices, medical / healthcare facilities, retail-related properties, etc.) are more potential benefits of opting for REITs as the best way to buy investment property – especially for those who lack the money and resources make these kinds of investments on their own.
Best Way to Buy Investment Property to Diversify
One of the main reasons REITs were created, to begin with, is to help everyday investors diversify their portfolios by putting money to work in assets that would ordinarily be out of reach for them. Depending on which Real Estate Investment Trust(s) you choose, you could own a piece of an apartment complex, office building, shopping mall, medical facility, storage facilities, and so on.
If this is something you think might be right for you and want to learn more about the best way to buy investment property through REITs, an excellent place to start your research is with DiversyFund. Their funding strategy for Growth REITs helps add value and is designed to accelerate growth over 5-year cycles.