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What are REITs?
A REIT is a company that owns, operates or finances income-producing real estate assets. Similar to mutual funds, REITs provide the average investor to own real estate which provides them access to a dividend producing asset.
Investors of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy, manage or finance property. This dramatically reduces the cost of entry for an investor to build a valuable real estate portfolio.
Most REITs operate simple business models. Primarily this is done by leasing space and collecting rent on its real estate. The company generates income which is then paid out to shareholders in the form of dividends. At the very minimum REITs need to pay out 90% of their taxable income to shareholders.
Why invest in REITs?
REITs typically provide dividends along with the potential for moderate, long-term capital appreciation. In the longer term returns of REIT stocks are similar to equity stocks and provide higher returns than lower risk bonds.
REIT stock returns have a low degree of correlation with the returns of other equities and fixed-income investments. This makes them a great asset to diversify your portfolio. This helps us to reduce the risk in our other positions and improve total return.
4 Reasons your need to include REIT's in your portfolio:
REITs have provided competitive long-term total returns similar to those of other stocks
REITs’ dividend yields historically provide a steady stream of income through a variety of market cycles
Shares of publicly listed REITs are readily traded and provide investors with liquidity when needed
REITs offer access to the real estate market typically with low correlation with other stocks and bonds, helping investors diversify their portfolios
I have been an avid equities and real estate investor for over 10 years. My passion for financial education and training stems from a desire to help others help themselves achieve financial freedom. Over the years I have personally trained hundreds of individuals to learn how to research, find and invest in REITs profitably.
The question that came up the most was:
“Is there a tool that can help me do this?”
As a result I am building the REITs Scanner to help my students and myself invest in REITs with greater precision and proftabality.
Tam Ging Wien
Author of “REITS to Riches”
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