Do you want to become a real estate investor? It may be easier than you think. No longer do you have to go through the traditional process of accumulating cash, finding a real estate agent, or building the perfect credit score. Thanks to legislation passed by Congress in 1960, investors at all income levels can participate in the real estate market without going through the strenuous process of buying physical properties. Instead, individuals can go to the stock market and invest in real estate investment trusts (REITs) in less than 5 minutes.
Ready to get started? Here’s what you should know about REITs:
There Are More Than 200 REITs in the U.S.
REITs are companies that offer a collection of commercial real estate properties that are packaged and sold to investors in the form of equities. Investors can shop from a selection of over 200 REITs that own and manage hotels, office buildings, residential space, warehouses, and other properties. Most publicly-traded REITs in the U.S. are listed on the New York Stock Exchange and are registered with the Securities Exchange Commission to protect investors and provide financial transparency.
No Active Management Required
Don’t have enough time on hand to manage a physical property? No worries. You don’t have to manage a thing if you are a REIT investor.
As a REIT investor, you are not required to provide any property oversight. There are professionals on hand who will collect rent, fix repairs, and ensure compliance with rules and regulations. So if a tenant has plumbing problems, it’s not your responsibility to fix it. It’s someone else’s job. You don’t have to worry about receiving complaints in the middle of the night. All you have to do is sit back, relax, and watch the value of your real estate stocks adjust to market demand while your dividend income flows into your account.
You Can Sell Your REIT at Anytime
REITs are attractive because they are liquid assets. Liquid means that the asset can be easily converted into cash. By pressing the sell button, your REIT asset gives you access to cash on demand.
For example, let’s say you bought a portfolio of REITs. If two years pass and you don’t like the direction your REIT is going in, all you have to do is sell your asset through your brokerage account. You’ll have the funds in your account as soon as the transaction has been processed. You’ll receive the current market value for your REIT asset less any commission or transaction fees.
The process for selling physical property is more time-intensive than selling REITs. When you’re ready to sell a property, you have to think about home repairs, closing costs, and realtor’s commission. The process doesn’t happen overnight and can cost thousands of dollars to get the property to selling point. It can take months or even years to sell a property and collect proceeds.
You Can Start Investing Now
Are you ready to become a REIT investor? Unlike many other investments, you don’t need thousands of dollars to get started. You can use your money from a day of work to get started. All you need to do is open and fund your brokerage account, research the best REITs for your investment portfolio, and press the buy button. It’s crucial that you do your due diligence before investing in any asset. You can leverage resources online, review company financial statements, listen to earnings calls, and get an investing mentor to start your journey in less than 5 minutes!
—Disclaimer: The opinions and financial advice expressed in this article are solely those of the contributor’s and not Black Enterprise’s.