A Real Estate Investment Trusts (REIT) are a good investment option for those looking for lower overall risk, greater diversification, and potentially higher total returns, according to Investopedia. A REIT is a type of security invested in real estate through either mortgages or property. They offer an extremely liquid real estate option. According to the REIT Financial Snapshot of March 2016, the FTSE NAREIT All REITs equity market capitalization is valued at over $984 billion. If you are wondering how to invest in a REIT, here is some useful advice.
REITs offer a solid potential return on investment, often more than lower risk bonds, but still less than that offered in higher risk, higher growth categories. Commercial real estate investment is particularly attractive in a REIT, with IBIS World research estimating that there are more than 4.3 million Americans employed in commercial real estate and the industry is worth over $945 billion. This category of property includes commercial, industrial and multifamily residential properties including office and retail spaces, and encompasses the management of the renting or purchasing of such properties.
A REIT is a way to invest in property with less risk. More often than not, you need a real estate partner to help you through the process. Investopedia notes that a REIT must have at least 100 shareholders and at least three quarters of it assets must be invested in real estate, cash or U.S. Treasurys, while 75% of its income should come from real estate. Companies like The American Real Estate Partners, which own about 4.2 million square-feet of class A office and flex assets, are private real estate investment firms that can show you how to invest in a REIT and offer advice on why invest in REITs. They help you to manage your investment, focusing on aspects such as cash inflows and outflows, timing of cash flows, and risks involved with investing. Inflows refer to items such as profit from sales, parking fees, rent and vending fees among others.
Solid investment advice is key to a good REIT investment. Professionals can help you navigate the tricky terminology and ensure that your profits are on track; they can also help you evaluate the risk of your investment, bearing in mind that Real Capital Analytics has estimated that more than $160 billion of commercial properties in America are now in default or foreclosure. This highlights just how important it is to have experts on hand who can advise you how to invest in a REIT and help you manage your commercial property investments in order to get the most profit out of them.
