Do you want to invest in Real estate investment trusts? If YES, here are great tips that will help you invest in Real estate investment trusts effortlessly. Real estate investment trusts (REITs) are business corporations that own or finance income-producing real estate properties. They finance the building or purchase of real estate properties that they can either rent or sell to other people in exchange for profits.
Real estate investment trusts are modeled after mutual funds in the sense that they allow a group of investors to pool their resources together to finance projects, in exchange for dividends from the profits made by the company. Here are 15 tips to help you earn passive income from REIT investments.
Table of Content
- 1. Invest in Niche REITs
- 2. Invest in Residential Real Estate Investment Trust
- 3. Invest in Healthcare Real Estate Investment Trusts
- 4. Invest in Office Real Estate Investment Trusts
- 5. Invest in Mortgage Real Estate Investment Trusts
- 6. Invest in Industrial Real Estate Investment Trusts
- 7. Invest in Hybrid Real Estate Investment Trust
- 8. Invest in Publicly Traded Real Estate Investment Trusts
- 9. Invest in Privately Held Real Estate Investment Trusts
- 10. Invest in Crowdfunded Real Estate Investment Trusts
- 11. Invest in Credit Union and Cooperative Societies Real Estate Investment Trusts
- 12. Start your own Real Estate Investment Trust
- 13. Invest in Land Real Estate Investment Trusts
- 14. Start Your Own Real Estate Mortgage Financing Business
- 15. Invest in Hospitality Real Estate Investment Trusts
1. Invest in Niche REITs
Most of the shopping centers we have today are owned by real estate investment trusts. In a booming economy, it can be very profitable to invest in REITs that are focused on building malls and shopping centers for sale or rent because when the economy is booming, more people are spending money on retail items and that means that there would be an increasing number of retailers willing to rent, lease or buy a space in shopping malls.
2. Invest in Residential Real Estate Investment Trust
This is probably the most profitable type of REIT that you can invest in. People would always need a roof over their heads, which is why REITs that invest in residential buildings like condos, block of flats, and developing residential properties for resale would always be profitable.
3. Invest in Healthcare Real Estate Investment Trusts
Healthcare real estate investment trusts build retirement homes, nursing facilities, hospitals, and medical centers. The health industry is one of the most lucrative industries in the world because wellness is very important for most people hence real estate investment trusts that focus on building healthcare facilities have a lot of opportunities to earn decent profits.
4. Invest in Office Real Estate Investment Trusts
These types of REITS develop office spaces for companies that may be interested in renting them, or leasing them.
You have to be careful with investing in office real estate investment trusts because these days, most organizations are encouraging their employees to work remotely as a way to reduce their overhead costs. This means that in the nearest future, the need for offices would have reduced significantly.
If you must invest in office real estate investment trusts, look for trusts that invest in co-working spaces and shared office facilities for start-ups. These are the types of office spaces that people would likely be looking to use in the future.
5. Invest in Mortgage Real Estate Investment Trusts
These types of real estate investment trusts specialize in financing residential mortgages that have been bundled together into Mortgage-backed securities so that investors can make profits from the interests on those mortgages.
These types of REITs do not own any physical property but focus on lending money to homeowners in exchange for profits from the interests that they receive.
6. Invest in Industrial Real Estate Investment Trusts
Another way to invest in REITs is to invest in trusts that are focused on investing in warehouses, manufacturing houses, and distribution centers. A lot of businesses are going into manufacturing in today’s business world, so industrial real estate investment trusts are taking advantage of that to build facilities for such business to use for a fee.
7. Invest in Hybrid Real Estate Investment Trust
Another type of real estate investment trust that you can put your money in is hybrid real estate investment trust.
These types of REIT diversify their portfolios by investing in income-producing properties, as well as mortgage financing. They earn interests from mortgage financing, and at the same time, they also earn interests from mortgage loans.
This is one of the best types of REITs to invest in because since the investments are highly diversified, you can be sure of earning some tangible income.
8. Invest in Publicly Traded Real Estate Investment Trusts
Some real estate investment trusts operate as fully incorporated companies listed on the stock exchange markets such as NASDAQ, and The New York Stock Exchange. You can simply purchase the stocks from these companies and earn from the dividends that they distribute to shareholders out of the profits that they earn.
9. Invest in Privately Held Real Estate Investment Trusts
Just like publicly traded real estate investment trusts, privately held real estate investment trusts meet with all the requirements by SEC to list their company on the stock exchange market, but they chose to trade privately.
This type of REIT is exclusively for deep-pocketed individuals as they have strict requirements for selecting investors. For instance, they choose investors with a minimum net worth of $1million dollars, and an annual salary of $200,000. They also charge a lot of transaction fees, usually higher than all the other types of REITs mentioned in this article.
10. Invest in Crowdfunded Real Estate Investment Trusts
Crowdfunded REITs are all the rage in the crowdfunding world. Over the last three years, crowdfunding platforms like Fundrise have helped to raise over $70million dollars for real estate related projects.
Many crowdfunders believe in the real estate industry because of the reduced risks and the impressive growth potential.
If you don’t have a lot of money to invest but still want to start small with REIT investments, you can start with investing in REIT projects advertised on crowdfunding platforms.
11. Invest in Credit Union and Cooperative Societies Real Estate Investment Trusts
A lot of credit unions invest their funds in real estate projects, and share the proceeds as dividends to their members.
Investing in credit union REITs is a good place to start; find out if there are good credit unions with REIT projects around you, find out if their dividend sharing plans are worth it, and if you are satisfied with it, join the credit union so that you can benefit from the proceeds of its real estate investments.
12. Start your own Real Estate Investment Trust
Instead of investing in REITs set up by other people, you can set up your own REIT, and have people invest in it. You can earn a lot of money both from the proceeds of the investment, and also from management fees and commissions that your investors would pay you for your efforts.
However, you would have to meet up with strict IRS regulations for setting up real estate investment trusts.
13. Invest in Land Real Estate Investment Trusts
Another type of real estate investment trust invests in land especially in towns and cities where the value of land has the potential to grow exponentially. They make money from buying and reselling lands to real estate developers.
These types of real estate investment trusts have lower running and maintenance costs hence they are able to make more profits and this means you can earn more dividends too.
14. Start Your Own Real Estate Mortgage Financing Business
If you have a very deep pocket, you can look into starting a type of REIT that specializes in providing mortgage financing services to prospective home owners. You can earn a lot of interests from mortgage loans, and also help a lot of people achieve their dreams of owning a home.
15. Invest in Hospitality Real Estate Investment Trusts
This type of REIT focuses on the travel and tourism industry. They build hotels, holiday rentals, and other facilities for tourists and visitors.
The travel and tourism industry is worth billions of dollars, which is one reason why hospitality REITs are able to make a lot of money for their investors.