Real estate as an investment option has traditionally been ruled by big investors who had extensive knowledge about how the industry works. Thanks to Real Estate Investment Trusts (REIT), individuals looking to invest in small amounts can take advantage of rising property prices to quickly grow their money. You won’t need detailed know-how about the best properties to invest in or the best locations. All you need to do is check the selection of plans offered by the platform and invest sums as low as $500. Here’s a quick overview of how they work.
A REIT is a crowdfunding organization that purchases and puts together a portfolio of residential and commercial properties. The company is run and managed by executives who are highly trained in the intricacies of the real estate industry. Using their expertise, they buy condominiums, hotels, retail outlets, office buildings, storage centers, and any other property that has the potential to appreciate in the coming years. Next, they lease or rent out these properties to tenants. The earnings and future capital returns are distributed among the investors.
Investing in REITs can earn you attractive returns. Dividends are paid out depending on the particular plan you purchase and the year of investment. Should you check the 2021 review of Fundrise, an eREIT, you will learn that between 2014 to 2020, the company awarded annual returns ranging from 7.4% to 12.4%, which is much higher than most investment options. Here’s another interesting factor. Since REITs pay out 90% or higher profits to their shareholders, they qualify for paying the minimum taxation. These savings are ultimately transferred to the investors. As for overheads, you’ll only pay 1% charges by way of fees.
Investing in a REIT is similar to investing in stocks and shares. The critical difference is that the money is used to purchase actual properties. You won’t buy the house, apartment, or office, but you’ll own a share of the investment. But, with a key difference. The shares are not traded publicly on the market. You can log onto the site and create an account by adding the sum you wish to invest. Next, you can check through their portfolio for options that appeal to you. Several projects are available across different property sizes, categories, locations, and types like, for instance, stores, single-family homes, multiple-family homes, commercial property renovation, and new home development.
REITs typically have an interactive website and mobile application, making it extremely easy to monitor and manage your investments. You can choose to earn passive income by requesting a dividend payout each quarter. These returns are paid out of the rental income the REIT earns from leasing out the properties or collecting loan interest payments from debt investments. Alternatively, you can reinvest the dividend and watch your money grow. You can also earn capital returns when the real estate investments are liquidated. REITs don’t just purchase and lease out properties. They also develop them by undertaking renovation and construction projects.
If you’ve always wanted to invest in real estate but don’t have the funds or know-how, REITs are the perfect solution. You can own properties without the hassle of managing them, dealing with maintenance and upkeep, or collecting rent payments. Select the properties that you think have the maximum potential and develop a passive source of income. Investing in real estate has never been easier.