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Are you ready to go spring shopping? Instead of running to the nearest mall to rummage the racks for the latest fall fashions, how about shopping for some assets that won’t go out of style next season?
If you’re looking for something that’s affordable, produces income, and can be sold anytime your fashion sense changes, you should explore the world of REITs.
REITs (real estate investment trusts) are a collection of commercial real estate properties that are packaged and sold to investors in the form of equities. Investors can shop from a selection of over 200 REITs that own and manage hotels, office buildings, residential space, warehouses, and other properties.
Are you thinking about adding REITs to your shopping list? Here are 4 reasons why REITs are fashionable:
Sell When You Want
You can sell your REIT anytime you want. If two years pass and you don’t like the direction your REIT is going in, all you have to do is sell your asset through your brokerage account. You’ll have the funds in your account as soon as the transaction has been processed. You’ll receive the current market value for your REIT asset less any commission fees. Commission fees typically range from $0-$10. Robinhood has gained popularity due to its commission-free services. Click here to sign up for Robinhood and you’ll get a free stock!
This isn’t how the process for selling physical property works. When you’re ready to sell a property, you have to think about home repairs, closing costs, and realtor’s commission. The process doesn’t happen overnight and can cost thousands of dollars to get the property to selling point. It can take months or even years to sell a property and collect proceeds.
REITs are attractive because they are liquid assets. Liquid means that the asset can be easily converted to cash. By pressing the sell button, your REIT asset gives you cash on demand.
Receive High-Yield Dividends
When a publicly-traded company realizes a profit from their operations, management can choose to keep the earnings or give the money to shareholders as a dividend. Retaining the earnings allows the company to invest in growing the business and keeping more cash reserves on hand. This means shareholders will either receive no dividend at all or they will receive a dividend yield that matches the board of directors analysis of how much should be given to investors.
There is no certainty that companies will pay dividends unless you invest in a REIT. All REITs are required to pay dividends as part of its structural agreement. REITs can not retain earnings. That’s why REITs are known to pay some of the highest dividend yields in the markets. REITs are required to pass down profits to investors. Companies under the REIT structure have to pay out 90% of their taxable income to shareholders in order to maintain their preferential tax treatment. When you invest in a REIT, you can count on monthly or quarterly dividends to provide you with income.
Enjoy Capital Appreciation
Not only do you receive high yield dividends for investing in REITs but you also get the benefit of capital appreciation. This is when the value of your asset goes up. Let’s say you bought a REIT for $20/share and you have 1000 shares. The value of your REIT investment is $20,000. A year later, favorable economic conditions cause the values of the REIT to go up to $40/share. Now those 1000 shares are worth $40,000. Your investment doubled!
The value of your asset doesn’t always go up when you expect it to. But you’ll continue to receive dividend income as long as you are an investor.
Avoid Maintenance Responsibility
Don’t have enough time on hand to manage a brick and mortar property? No worries. You don’t have to manage a thing if you are a REIT investor.
As a REIT investor, you are not required to provide any property oversight. There are professionals on hand who will collect rent, fix repairs, and ensure compliance with rules and regulations. So if a tenant has plumbing problems, it’s not your responsibility to fix it. It’s someone else’s job. You don’t have to worry about receiving complaints in the middle of the night. All you have to do is sit back, relax, and watch your dividend income flow into your account.
Start Earning Income from Your Investments!
Grab your copy of Dividends Are a Queen’s Best Friend on Amazon! This book removes all the intimidating lingo and gives you the step-by-step information needed to get started and keep going on your journey.
If you’re ready to take control of your finances and add another source of income to your portfolio, this is for you!
Click here to see what other readers had to say about the book.
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Disclaimer: Wealthy Women Daily is solely educational and informational, and is not intended to give investment or trading advice of any kind. Not all asset classes are suitable for all investors. Wealthy Women Daily is a research academy that provides you with the data and analysis you need to make an informed investment decision. It is your responsibility to talk to an expert to understand how specific investments will impact you during tax time.
