If you’ve been wondering how to invest in real estate, you are not alone. There are several options available to you, ranging from REITs to REOCs.
Investing in a REIT
These companies own and manage properties and must pay out a portion of their earnings as dividends. In addition, REITs may have to borrow money to expand their real estate holdings, putting their profits at risk if interest rates increase. The National Association of REITs maintains a directory of publicly-traded REITs.
There are two types of REITs. The first one, publicly-traded, is listed on the stock exchange. Investing in non-traded REITs is risky because investors may pay hefty commissions to brokers. In addition, these investments are often difficult to sell quickly, which makes them less appealing to retail investors. If you’re interested in investing in a REIT, you should check with your broker to ensure that they have experience buying and selling these kinds of investments.
Directly investing in real estate may be a better option for many investors. Purchasing real estate properties yourself is time-consuming and may require a five or six-figure initial investment, not to mention the expenses of renovating, marketing, and managing the property. However, publicly-traded REITs often have low investment minimums and, in some cases, no minimum investment requirement. If you’re unsure of the pros and cons of either approach, talk to a financial planner and discuss your situation with them. Ensure all your financial obligations are covered, including your retirement plan, an emergency fund, and debt.
Investing in a REIT allows you to diversify your investments and take advantage of low volatility. REITs also allow you to diversify your portfolio across many different industries. In addition to their diverse investments, REITs are also regulated by the SEC. Consequently, most REITs must disclose important information, including their earnings reports. This information helps you predict market trends and determine the best REITs to invest in.
Investing in a REOC
If you have liquid capital and want to increase your investment returns, investing in a REOC may be a great way to achieve your goals. These companies invest in real estate and offer investors the opportunity to benefit from passive cash flows and capital gains.
Another advantage to investing in a REOC is its ability to protect investors from the risks and rewards associated with real estate. These companies invest in and manage properties and often sell individual units or common areas. Investors buy shares in REOCs through a financial professional or broker-dealer. While investing in REOCs allows you to avoid owning real estate, they are still subject to certain risks. Therefore, investors should research REOCs carefully before investing in them.
Real estate operating companies own and operate real estate properties in different sectors. REOC shares are traded on a public exchange market. These companies do not pay dividends but reinvest most of their profits back into the company. These companies can have several business segments, such as distressed properties and new development projects. EOCs can also use their income to develop and sell new properties. Another way to invest in REOCs is to consider REITs. REITs are generally taxed as ordinary corporations and often return a large portion of their income to investors. REOCs can also offer investors protection against inflation because they will continue to appreciate in nominal terms even if the value of the currency that they invest in falls. REITs also have the advantage of diversification. A real estate investment can be a smart way to protect your investments while enjoying high yields and div