Iinvesting in real estate is a great way to build a diversified portfolio, enjoy passive income and achieve the various financial goals you have set for yourself. But there’s more than one way to get into real estate, and my go-to pick actually requires a lot less work than flipping houses, managing vacation property, or overseeing a long-term rental.
If that sounds good to you, you’ll want to listen to this key tip.
Look beyond the actual properties
It’s a big misconception that investing in real estate means having to go out and own or flip real property. It is more than possible to invest in real estate without owning it. All you have to do is load your portfolio with REITs or real estate investment trusts.
REITs are companies that own and operate different types of properties. Industrial REITs, for example, manage distribution centers and warehouse space. Healthcare REITs operate urgent care facilities and hospitals. And retail REITs operate malls and malls.
The beauty of investing in REITs is that you really don’t have to do anything other than research the companies whose stock you’re looking to buy, just like you would a stock. Once you own REITs, you can sit back and wait for your regular dividend payments to arrive. You don’t have to worry about the hassle of maintaining properties, dealing with tenants, or processing rent payments.
In fact, one thing that makes REITs so attractive is that they tend to pay higher dividends than your average stock. Indeed, REITs are actually required to pay out at least 90% of their taxable income as dividends.
But that’s not the only way to make money with REITs. If you stock up on quality companies, the value of your REIT shares could increase over time. Hold these REITs for years and you could end up with considerable wealth.
An easier way to become a real estate investor
You might think that investing in real estate is complicated and time-consuming. But if you choose to focus on REITs, you can seamlessly build a portfolio and then sit back and wait for it to make money for you.
That’s not to say there’s no value in owning income properties or flipping houses. But if you prefer to take a more passive approach to real estate investing, REITs are the way to go.
REITs may also be a more appropriate investment if you consider yourself risk averse: although you can lose money with REITs when you own REIT shares, you are not responsible for managing the buildings. real.
When you own an income property, you are financially responsible in the event of a breakdown. And if you embark on a house flipping project that goes wrong, you’ll be the one footing the bill for the extra costs.
With REITs, there is no stress. And it may align better with your general approach to investing.
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