Littleton, CO is an attractive real estate market, with low supply creating high demand. You want to take advantage of investment opportunities. Did you know you can get the benefits of real estate investments without buying and selling property?
Real estate investment trusts (REITs) can have advantages for your portfolio. Learn more about REITs and how they can fit into your investment strategy.
What Are Real Estate Investment Trusts?
Real estate investment trusts (REITs) are companies that own, operate, or finance income-producing real estate. REITs invest in residential and commercial properties, like:
- Apartments
- Offices
- Retail
- Industrial
- Hospitals
- Data centers
- Self-storage facilities
- Hotels
- Cell towers, billboards, and other niche markets
Many REITs are publicly traded on major stock exchanges.
REITs earn income from the properties they own. They're legally required to distribute at least 90% of their taxable income to their shareholders each year.
Advantages of REITs
Real estate investment trusts have several benefits for your investment portfolio. You can include real estate without needing to buy or sell the properties.
Ease of Entry
With an REIT, you can have real estate in your portfolio at a lower price. You're buying shares or fractional shares. You don't need a down payment or a mortgage.
Liquidity
Real estate is not typically a liquid asset. Selling an investment property can take several months.
Publicly-traded REITs don't have this problem. You can easily buy and sell shares.
Diversification
Diversifying your portfolio helps protect your assets. You limit your exposure to the risks for each category of investments. For example, real estate tends to be less volatile on a short-term basis than stocks.
An REIT diversifies your portfolio. It can also help you diversify your real estate holdings to reduce your risk. You can choose different real estate sectors and geographic areas.
Reliable Passive Income
REITs represent a reliable passive income stream. They're legally obligated to distribute at least 90% of their taxable income to shareholders. Keep in mind that any dividends you receive will be taxed at your normal income tax rate, though, not the lower long-term capital gains rate.
Unlike most real estate investments, income from an REIT is truly passive. You don't need to worry about issues like maintenance, repairs, or evictions.
How to Invest in an REIT
You'll need to open a brokerage account to invest in REITs. Publicly-traded REITs are usually the easiest way to start. When choosing an REIT, the factors to consider include:
- Historical performance
- Sectors where the trust is active
- Operating expenses
If you don't want to research and trade individual REIT stocks, you can buy shares of a mutual fund or exchange-traded fund (ETF) that invests in a variety of REITs.
Littleton Real Estate Investing
Real estate investment trusts have several advantages. One of the main benefits of property trusts is that they make diversifying your assets easier. Purchasing shares of an REIT is easier than buying real estate outright, and you get regular dividends.
If you have questions about real estate investing in the Littleton area, reach out to PMI Little Town. We provide comprehensive brokerage and consulting services. Whether you're a beginner or a seasoned real estate investor, we deliver quality, value, and results.
Schedule a consultation with PMI Little Town today to discuss how we can help you meet your real estate goals.
