What's A REIT And How Do I Benefit From One?
Updated: May 5, 2020
What Is A REIT?
A REIT, aka a real estate investment trust, is a company that invests in both residential and commercial real estate. This company both owns and operates these income-producing assets. With this money, the company will then become more profitable and buy additional real estate.
How Does This Information Help Me At All?
REITs can benefit you because they are commonly traded on the New York Stock Exchange for you to invest in. With this said, you don't have to fix toilets or get random phone calls at 3 a.m. from your tenants. All you must do is invest in a carefully picked REIT, and you will basically be collecting the "rent" by your stock price increases in value. If you would like to invest in real estate but you do not have the capital required, you still possess the ability to invest in quality income-producing real estate assets.
Are There Any REITS That I Recommend?
One of the REITs that I am currently investing in is the Vanguard US REIT Fund, Ticker Symbol: (VNQ). Buying this stock on October 16th, 2018, I have solidly gained a 5.78% return at the moment I am writing this, which is December 4th, 2018. To back up my investment, the research I've performed on not only the stock but the company benefits the fund's credibility. Since its inception in 2004, the fund has returned on average 8.43% annually. Additionally, this fund has an expense ratio of .12% (as of 5/25/2018), which is 90% lower than the average expense ratio of similar funds. Lastly, Vanguard's real estate trust, in my opinion, is a great investment for those looking to invest in real estate but do not have sufficient capital to buy real estate or do not want to deal with the hassle of tenants.
Disclaimer: I am not a financial advisor, so please review all of this advice with your CFP or financial advisor first.