What if you were told that you could earn regular dividends from your investments without the hassles relating to buying, managing or even financing a property? Sounds too good to be true, right? Well, that’s precisely what a REIT allows. A REIT, or real estate investment trust, is a company that owns multiple income-earning real estate. It enables individual investors to buy shares of the REIT and add to their investment portfolio.
The History of REIT
Before we dive into its benefits, let’s take a look at how REITs came into play in the United States. REIT was a part of the Cigar Excise Tax Extension of 1960 implemented by President Eisenhower to allow for an affordable platform for the public to be able to invest in income-making real estate. According to Forbes, these are the prerequisites a company must meet to qualify as a REIT -
- Invest at least 75% of total assets in real estate.
- Derive at least 75% of its gross income from rents from real property, interest on mortgages financing real property, or real estate sales.
- Pay at least 90% of taxable income as shareholder dividends each year.
- Have a minimum of 100 shareholders.
- Have no more than 50% of its shares held by five or fewer individuals.
Benefits of REIT Investment?
The biggest USP of investing in REITs is probably the fact that they offer a lower risk for investors looking to enter the real estate market but don’t want to burden themselves with the inconvenience of managing a property. Since 90% of the taxable income goes to its shareholders, individuals investing in REITs earn high dividends.
Despite the ongoing pandemic, 2021 turned out to be a spectacular year for investors. Retail strip centers went up by 65% while the mall REIT index was up by 95%. That’s not all, the FTSE Nareit All Equity REITs index saw a return of 41.3%. Experts expect this significant improvement to be an ongoing occurrence in the real estate investment market, owing to the expected economic growth, higher incomes and extended spending/purchasing power across the country.
Crypto is changing the real estate industry. Invest in real estate using crypto currency!
Real Estate Articles / Sep 01, 2022
With the economic inflation rising, the real estate and financial market is undergoing changes. Crypto currency is the new trend in real estate and in the investment world as more people are using crypto to invest in real estate.
How increase in interest rates will affect the real estate market in 2022
Real Estate Articles / Jul 08, 2022
2022 has proven to be a pivotal year for the housing and real estate market. With the ongoing Ukraine war on one side, and the rising interest rates on the other, the housing market is seeing a shift from the post-Covid boost.
Purchasing Commercial Real Estate? Consider These 5 Things Before You Buy
Real Estate Articles / Feb 09, 2019
Whether you are a seasoned investor, or you\'re researching for your first property there is always a certain risk factor that makes us hesitate before signing the dotted line.
Industrial development on the rise in Texas real estate 2023
Real Estate Articles / Apr 04, 2023
Texas has become a place of choice for businesses because of its growing population. This growth has led to increased demand for commercial real estate development, specifically industrial development. This rise is set to continue until the end of 23
How you can profit from investing in Texas wetlands
Real Estate Articles / Dec 21, 2022
Wetlands are profitable investments if done right. Texas has multiple real estate investment options, including wetlands and you can get great returns on investment from them.
This Is How Multifamily Real Estate Can Help The Retail Sector
Real Estate Articles / Jan 31, 2023
Having a multifamily property in a retail center is beneficial for both the buyer and seller and the residents of the property. The demand for rental communities that offer combined spaces for living, working, and entertainment is on the rise.
Tesla moves to Texas - Impact on real estate and economy
Real Estate Articles / Jan 27, 2022
2021 was a big year for real estate in many ways, but the biggest news of the year came towards the end of it when billionaire magnate, Elon Musk announced his move from California to Texas.
Why Grocery-Anchored Real Estate Does Better!
Real Estate Articles / Feb 22, 2023
Grocery-anchored shopping centers are on the rise in the retail sector. They are the best investment in commercial real estate. It is low risk and long term.
Falling Home Prices? Here's All You Need To Know!
Real Estate Articles / Aug 08, 2022
Here’s how you can take advantage of rising interest rates. Advantages of investing during high interest rates are listed below. Invest in real estate today.
The Ultimate List of Real Estate Terms
Real Estate Articles / Feb 25, 2022
We have compiled a list of top real estate words you need to know whether you are a real estate agent or are looking to buy a house or buy a commercial property. This is the real estate lingo you should know.
