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How to invest in real estate investment trusts

On Behalf of | Sep 12, 2022 | Real Estate

If you’re interested in becoming a real estate investor in Florida, REITs are a good option. REITs, or real estate investment trusts, give individuals an opportunity to invest in real estate without having to purchase and manage properties. REITs also offer generous and steady dividends, which is very attractive to investors.

Choosing your REITs

REITs allow you to invest in commercial real estate, and there are options available. You can invest in shopping malls, hotels, office buildings, warehouses, apartments and much more. There are three categories of REITs: equity, mortgage and hybrid. Equity REITs are income-producing properties, mortgage REITs provide financing for income-producing properties and hybrid REITs are a combination of the two. All REITs have very specific characteristics, so it’s essential to do your research before diving in.

Opening a brokerage account

When you’re ready to start investing in REITs, you must open a brokerage account. This takes just a few minutes. Once your account is open, you can trade REITs in the same way that you would trade stocks, or you can purchase REITs and hold them long-term.

Downsides of REITs

REITs are typically more expensive to invest in than stocks. It can cost up to $25,000 just to get started. This amount of money is much cheaper than actually purchasing a commercial property, but many people don’t have $25,000 to invest. Another potential downside is that most commercial real estate owners have a hefty amount of debt. Long-term investors are typically okay with this since they make money through cash flow.

With REITs, you can easily add many different types of real estate to your investment portfolio and start receiving high-dividend payouts. REITs are most ideal for long-term investors since real estate values generally increase year after year, but short-term investors can also receive great financial benefits.