It’s not just the wealthy who get to invest in real estate anymore. There are now affordable, viable offerings for every type of investor, including those who don’t have much to spend. If you’re just getting started, you will probably see much information regarding REITs. They are a popular property investment for beginners and regular, casual investors.
A real estate investment trust fund is similar to other types of mutual funds except that it focuses on investments involving aspects of the real estate sector (residential, commercial, industrial, agricultural, etc.) An agricultural-focused REIT, for instance, will allow you to invest in funds in various farms or agricultural-related commodities.
These are unique investments in many ways and are required to follow a particular set of operational laws to qualify for a legitimate REIT that people can invest in. The primary requirement that sets it apart from other investment platforms is that a minimum of 75% of its gross income must derive from real estate-related sources and invest a minimum of 75% of its total assets into real estate. Additionally, a REIT must distribute 90% or more income earned from those real estate investments directly to their investors.
With such requirements, it’s obvious why a REIT makes an excellent option for property investment for beginners. They can be helpful in both regular yields via dividends and long-term returns via appreciation. It’s recommended to choose a few different types of REITs to help diversify. Just keep in mind that not all of them are run equally. Always consider things like the investment strategy, how it is traded, the potential earning power, and so forth.
Property Investment for Beginners With REITs
Location is essential as well. Will the properties associated with the trust be able to thrive in the areas in which they operate? High-end luxury apartments or condos probably will not succeed well in low economic regions unless there is a lot of growth potential for businesses in those areas, and you can hold it out for the long term. As for agricultural-related REITs, you probably wouldn’t want to risk your money on a farm located in an area with temperamental weather.
There are other types of property investment for beginners and REITs. However, the latter tend to be the most accessible and most affordable. Real estate crowdfunding might be something worth looking into. Flipping houses is something that you will only be successful at if you know what you’re doing, so it’s typically not recommended for beginners. If you want to try it, do much research and make sure you have some relevant expertise or skill set, whether interior design, construction, landscaping, etc.
To get started with property investment for beginners, consider looking into REITs offered by organizations such as DiversyFund. It focuses on multi-family real estate (apartment buildings) and has a pretty solid strategy for growth and returns.