Real estate investment trusts (REITs) are a good solution for small investors who don’t want the hassle of finding, buying, and managing properties themselves. Or doing all the due diligence of investing in a specific property on a crowdfunding site. And that’s not the only advantage they have. By law, REITs are required to pay out 90% of their earnings in the form of dividends. And you are not required to be an accredited investor.
REITs are an easy way to add real estate to diversify a portfolio. And they can provide passive income. The downside is that there’s less upside when investing in REITs because someone else is doing the work for you. And you need to watch out for high fees. REITs can have upfront sales “loads” (fees) that are much higher than with mutual funds and exchange-traded funds (ETFs).
REITs invest in all commercial real estate types, from hotels to apartments to assisted living facilities, storage facilities, office buildings, industrial space, retail space, and more. They are mandated by law to be widely held and distribute 90% of their income to shareholders. And because investors can purchase shares on the stock market, REITs are a very liquid asset.
You can purchase shares of publicly-traded REITs through any discount or full-service broker. You can buy them as common stock, preferred stock, or debt securities. It’s also possible to find REITs in ETFs.
There are also several online platforms where you can buy REIT shares.
- Streitwise allows you to invest in the lucrative commercial real estate market for just $5,000.
- CrowdStreet’s new C-REIT lets you invest in a diverse portfolio of commercial real estate properties.
- Fundrise‘s eREITs allow investors to take advantage of a variety of commercial real estate properties for as low as $500.
- RealtyMogul‘s REIT products provide exposure to multi-family, office, industrial, retail, self-storage, medical and hospitality properties.
- Rich Uncles’ NNN REIT is invested in property leased by retail companies.