According to Yahoo Finance, nine out of ten millionaires generated their wealth through investing in real estate.
Many people dream of joining these ranks but feel held back by a lack of high capital to buy real estate properties. They cannot raise enough money for down payment, maintenance, and property management. This is where real estate investment trusts (REITs) offer a solution.
You might have heard about REITs but don't know how they work. You might be skeptical about their reliability as an investment instrument.
Want to know how REITs can enhance your investment strategy? Read on as this blog explores REITs benefits.
Steady Income and Dividends
According to Investopedia, at least90% of a REIT's income must be distributed to shareholders as dividends. Investing in them can help you generate a consistent income. REIT dividends are usually higher than those of traditional stocks.
Besides, over time, real estate values rise, and rent increases. This protects your investment against inflation and ensures your income keeps pace with rising costs.
Portfolio Diversification
REITs provide an easy way to diversify your real estate portfolio across different types of properties and geographical locations. REITs can spread your investment across:
- Office spaces
- Retail centers
- Healthcare facilities
- Residential complexes
REITs invest in properties nationwide or internationally, reducing your exposure to local market downturns. The geographical spread further insulates your investment from market-specific risks.
Despite owning investment trusts across multiple properties, you won't have to worry about their management. You don't have to:
- Manage properties
- Deal with tenants
- Handle repairs
Instead, professional management teams oversee the real estate assets.
Liquidity and Accessibility
Selling a real estate property can take months and comes with significant transaction costs. That's why some people are reluctant to invest in real estate due to liquidity issues. Real estate investment trusts (REITs) offer a liquid alternative.
Publicly traded REITs are listed on stock exchanges, allowing you to buy and sell shares easily. You can sell your REITs fast when you need urgent cash.
REITs are easily accessible to all individuals. You don't have to save tens of thousands to buy them. Once you invest in them, you won't have to worry about making regular mortgage payments.
Tax Advantages of REITs
REITs can deduct depreciation from their income, reducing the taxable income distributed to shareholders. A substantial portion of dividends is shielded from immediate taxation, boosting returns. Consider talking to specialists to learn more about real estate investment strategies.
Get help comparing different property investment options to decide which one to pick. Learn more about different types of REITs and the tax advantages each of them offers.
Leverage Real Estate Investment Trusts (REITs) to Build Wealth
Real estate investment trusts (REITs) offer a unique opportunity to invest in real estate without the financial burden of property ownership. Adding them to your portfolio can lead to consistent income and long-term financial growth.
At PMI Central Florida, our experts can guide you in making smart REIT investments. Get in touch today to learn how we can support your real estate investment goals.
