TSI #34: How to invest in real estate without buying properties

Hello Stoic Investors,

Today I want to focus on real estate. 

I know what you’re thinking.

“I need a lot of capital to get started with real estate”.

Well, yes. If you were doing it the old-fashioned way.

However, there is a better way. An easier way for you to profit from real estate investing.

Introducing REITs

Real estate investment trusts, or REITs, are a popular way to invest in real estate without having to buy and manage properties.

It almost seems too good to be true right?

REITs are companies that own, operate, or finance income-producing real estate, such as apartments, office buildings, warehouses, and shopping centers. 

And they are traded on stock exchanges, just like stocks, and are subject to the same regulations.

They’re even good in inflationary periods.

But before you get too excited…

Pros and cons of investing in REITs

Weighing up the pros and cons can speed up the decision-making process. So here is me saving you some time.

Pros of investing in REITs:

Diversification: REITs offer a way to diversify your portfolio by gaining exposure to the real estate market without having to buy property directly.

Income: REITs offer a steady stream of income, as they are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends.

Liquidity: REITs are relatively easy to buy and sell, just like stocks, and are often publicly traded, making them easily accessible to small investors.

Transparency: REITs can offer a high level of transparency, as they are required to file regular financial reports with the SEC.

Cons of investing in REITs:

Market fluctuations: REITs are subject to market fluctuations, and the value of your investment can go down as well as up.

• Management: REITs are managed by professional managers, but they may not always make the best decisions for investors.

Risk: Investing in REITs can be riskier than investing in other types of real estate, as REITs are subject to the same risks as other publicly traded companies.

Limited control: As a REIT investor, you have limited control over the properties and operations of the REIT.

You can screen for REITs here: https://finviz.com/screener.ashx and filter for real estate.

Some of the most popular REITs include Realty Income ($O), Prologis ($PLD), American Tower Corporation ($AMT), Crown Castle Inc. ($CCI).

That being said, REITs are usually the only way for the everyday investor to access the real estate market. 

Just make sure you do enough research on the properties your chosen REIT owns. 

So, note down these points and start investing today: 

- You can easily invest in real estate with REITs

- Pros: diversification, income, liquidity, transparency

- Cons: market fluctuations, management, risk, limited control