You'd like to
invest in Real Estate, but...
1. You aren't sure what to invest in (condos, apartment
buildings, commercial properties, land), and
2. You're not certain if you have enough money available to make
a suitable Real Estate investment.
It seems that everyone is investing in some form of Real Estate,
but you consider yourself a novice and your risk tolerance is
low. You don't want to make a costly mistake, so you decide to
wait. You may have even purchased tapes and books and videos
extolling the virtues of Real Estate investing, and how simple
it is to become financially independent.
The old saying, "If it's so easy, everybody would be doing it,"
is just as appropriate for the Real Estate market.
Also, you may think that it's too late -- the so-called Real
Estate "bubble" is about to burst.
Are there any alternatives for the neophyte, or the conservative
investor who's very concerned about his or her life savings?
There are such alternatives, a method by which you can own real
estate and have it managed, with the liquidity of the stock
market. It's called a REIT, or Real Estate Investment Trust.
For about fifty years, REITS have offered investors the
opportunity to own a variety of Real Estate investments --
commercial and private -- without the aggravation,
inconvenience, and time-consuming hassles of individual
ownership.
On top of this, a REIT can be purchased or sold just like as
common stock. Professionals who are experienced in buying,
selling, and renovating properties manage them.
Because many REITS purchase several properties, their
diversification often keeps the investment risk low. Within the
REIT, the management team has the capability of divesting itself
of unprofitable properties, and, if the timing is appropriate,
the ability to purchase additional properties.
Many REITS also offer very competitive dividends, which make
them an excellent alternative to bonds and preferred stocks.
Also, the value of the properties in the REIT can appreciate,
giving the investor a very important investment advantage --
total return (appreciation plus dividends).
This appreciation in value is rarely seen in bonds (unless
interest rates drop sharply), and, unlike bonds, REITS do not
have a maturity date.
REITS are not without their risks. The Real Estate market could
weaken, apartments and mall locations could remain vacant for a
period of time, or the REIT may not want to risk putting
additional capital in certain properties.
If you don't have the expertise to invest in individual Real
Estate ownership, or, if you're a conservative investor who
demands liquidity in your portfolio, speak to your investment
advisor regarding REITS. These trusts may give you the liquidity
and the diversification you need and deserve.
As a final note: If you're searching for appropriate vehicles
for your IRA, REITS may be one of your best alternatives.
Remember to do your homework. There are many different types of
REITS out there. |
