Real estate investment trusts (REITs) generate income from investment properties from multiple market sectors they own and manage. Generally, publicly-traded REITs make it easy for investors to enter the market. There are two types of REITs; mortgage REITs, comprised of residential and commercial properties, and more diversified equity REITs.
When you invest in a REIT stock, you are leaving the zone of dividend stocks and entering that of a real estate investor, and as with most things in life, this difference has both positive and negative aspects. Sadly, many investors experience decision paralysis and never make a move. When it comes to financial matters, using your gut instinct just is not enough. Instead, you must educate yourself on the subject thoroughly, weighing the pros and cons of any significant choice. These steps will help to improve your understanding, and you will take action sooner, feeling confident in your decision.
Passive real estate investments are a gateway to balancing your investment portfolio, realizing tax benefits, and building wealth. A properly managed, well-diversified real estate portfolio can provide security for your retirement with a reliable monthly income stream that will carry you through your golden years. Time waits for no one, and there is no better time to start investing in your future than right now. So read on as we explore the pros and cons of real estate investment trusts for investors in Orange County. Please note that this article is for informational purposes, not financial or legal advice.
Pros
You will earn regular dividends as REITs must pay out at least 90 percent of their taxable income to qualifying shareholders, one of the pros of real estate investment trusts for investors in Orange County. In addition to the added diversity of REITs, most real estate investment trusts have another plus in providing liquidity for investors as they easily convert to cash. Another pro of real estate investment trusts for investors in Orange County is the high yields, typically higher than with real property. Professional investors like those at H&M Realty Group can help you build and manage a healthy real estate portfolio. The professional investors at H&M Realty Group will help you understand your budget and how to focus on the best real estate investments to help you earn the highest returns. At H&M Realty Group, your success is our success.
Cons
One of the cons of real estate investment trusts for investors in Orange County is that, unlike with real property, you are not building equity. Equity allows you to leverage your holdings to increase your portfolio as your properties appreciate and provides increased cash flow at a faster pace. And REITs are sensitive to interest rates, so holding them for the long term, over five years, may provide better returns than more short-term focused investments. In addition, dividends from a real estate investment trust typically come with a higher tax rate than other investments. Finally, real estate trends can strongly affect the value of a REIT if there is a centralized focus on one market sector. These trends may be more challenging to catch than those specific to that type of investment property or a smaller, more localized trend. Another downside of real estate investment trusts is the self-limiting effect of paying 90 percent of profit in dividends, making it difficult for the REIT to grow its portfolio. Investing in single or multiple properties may earn a higher overall return. Professional investors like those at H&M Realty Group can help you examine the numbers and understand the complexities of real estate trends at national and local levels to ensure you are confident in your investment and making real-time adjustments to your portfolio when needed. The professional investors at H&M Realty Group understand that the returns of a holding reflect the management of the property. When you work with us, you work with a full-service in-house team of industry specialists, including the most highly regarded property management team in Orange County, from tenant screening and placement services to full-time on-site management. Happy tenants make for happy investors, and the pros at H&M Realty Group have the know-how and people skills to keep them happy and protect your investments while they earn their fullest potential in profits.
The professional investors at H&M Realty Group can help you weigh the pros and cons of real estate investment trusts for investors in Orange County. We make it easy for investors like you to earn the highest possible income for your investment dollar by investing in the best available real estate investment. If you dream of being a hands-on landlord, let the pros at H&M Realty Group help you learn the ropes of each sector as you diversify your real estate investments for added security against any sector’s downturns. Or, just sit back and relax, enjoying your retirement as we handle everything at H&M Realty Group while you earn passive real estate income. Call H&M Realty Group at 949-625-4533.