Guide to Real Estate Investing & Real Estate Investment Trusts (REITS)
By William Amanhyia
Real Estate investing involves the purchase, management, rental and ownership of property with the expectation to make money. Real estate can be very lucrative investments if bought and sold at the right price. The biggest drivers of real estate investment profit is the appreciation in price relative to how much it was purchased for and rental income.
Types of Real Estate: Real estate is usually classified into three broad categories based on their use:
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Residential
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Commercial
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Industrial
How to Invest in Real Estate:
Rental Properties: This involves purchasing properties and then renting it out to tenants. This practice is very common and has been around for a long time.
Real Estate Investment Group:
Real Estate Investment Trusts:
In the long term, which is usually seven years or more, nearly all properties gain in value due to population growth, jobs, income and wealth growing faster than new construction. Over the long term purchasing power pushes up real estate prices. There are bubbles from time to time, due to market imbalances and excesses, but nearly all property values trend upwards in the long term.
Real Estate Investment Trusts (REITS)
Reits are securities that sell like stocks on an exchange. REITS invest in real estate directly, either through properties or mortgages. The types of real estate that these trusts invest in range from office buildings, shopping malls, apartments, hotels and mortgages. REITs provide a way for investors to invest in real estate without directly purchasing or owning real estate.
Special Tax Considerations: REITS pay out 100% of their taxable income to their shareholders. The investors of REITs are responsible for paying taxes on dividends and capital gains they receive from their investments in REITs.
How to purchase REITs
Shares of REITS can be purchased directly through a broker or through an ETF or Mutual Fund
Fees: fees of REITs will usually range from broker to broker.