Real Estate Investments to See Real Profits
Many investors say they want two things in their investments – a return on their money and some security that their money will not be here today and gone tomorrow. When it comes to trading on the stock market or purchasing mutual funds, those are usually two things that cannot be promised. When you purchase stocks, you never know if the company is going to have a bad quarter, losing you a chunk of your investment or if they are going to fail altogether, taking your money with them.
The only place you can really be sure that you will not lose everything in a bad session is in real estate.
Even if the bottom falls out of the real estate market, real estate that has been purchased is an asset. So, while there may be losses in a major downturn, you won't lose everything. Often in this case if you were to hold on for a little while and be patient it will all bounce back and you'll be seeing dividends come in again like nothing ever happened.
There are two ways to invest in real estate. The first is to make a real estate purchase. For the most part this means having a lot of money in hand to be able to buy a piece of property or a building outright. For most people this is not a possibility as this means having tens to hundreds of thousands of dollars in hand to invest.
There is another option however. Instead, why not be a part of a real estate investment trust or REIT. A REIT is where you are a shareholder in property ownership. This means you will purchase shares that go into a collective pot that is used to purchase and maintain properties. These properties could be anything from commercial buildings that are being leased out to residential buildings that are rented out.
The way a REIT works is that as the real estate management group makes a profit, that profit will be given to you as a dividend. Laws dictate that at least 90 percent of the profits from a REIT have to be returned to the shareholders, so barring a major downturn in the economy you know you will get a return on your investment year after year.
That other 10 percent of the profit from the REIT will go back into the management of the properties or possible improvement or expansions that will give you even more return on your investment dollar in the future.
Unlike regular real estate purchases, there is another benefit to REITs. If you ever needed to pull some of your money out it is as easy as selling a few shares instead of having to sell a property and go through all those hassles.
Getting into the REIT market is also relatively simple. Just go to REITBuyer.com and you can research the REITs out there and even make your purchases in one stop, as they are an investment real estate broker as well.
Tuesday, March 3, 2009
REITs Used to Be Available Only to Institutional Investors and The Rich
About REITs: Real Estate Investment Trusts
Real Estate Investment Trusts (REITs) were created in the 60s so that all investors would have access to income-producing real estate through the purchase and sale of liquid securities. Before REITs were created access to investment returns of commercial real estate equity was only available to institutions and wealthy individuals.
For over half a century, REITs have become an important part of the United States economy and investment markets. United States REITs have grown from ninety billion dollars to over three hundred billion dollars in the past decade and they have gained popularity all over the world.
During their early years, mortgage Real Estate Investment Trust dominated the industry, providing debt financing for commercial or residential properties through investments in mortgages and mortgage-backed securities. Interest in equity REITs which own and manage commercial properties was limited because of the requirements that ownership and management of assets remain separate. This restriction was lifted with the passage of the Tax Reform Act of 1986 which allowed REITs to both own and manage properties. Now, more than 90% of publicly traded United States REITs are equity REITs that own and manage commercial real estate. Most of their income is derived from rents owned by companies across the nation.
There are certain guidelines and standards in place that must be followed in order for a company to qualify as a REIT in the US. The Internal Revenue Code requires at least seventy five percent of total assets be invested in real estate which realize at least seventy five percent of its gross income from rents from real property or interest from mortgages. They must also distribute at least ninety percent of taxable income to shareholders annually in the form of dividends.
Real Estate Investment Trusts (REITs) were created in the 60s so that all investors would have access to income-producing real estate through the purchase and sale of liquid securities. Before REITs were created access to investment returns of commercial real estate equity was only available to institutions and wealthy individuals.
For over half a century, REITs have become an important part of the United States economy and investment markets. United States REITs have grown from ninety billion dollars to over three hundred billion dollars in the past decade and they have gained popularity all over the world.
During their early years, mortgage Real Estate Investment Trust dominated the industry, providing debt financing for commercial or residential properties through investments in mortgages and mortgage-backed securities. Interest in equity REITs which own and manage commercial properties was limited because of the requirements that ownership and management of assets remain separate. This restriction was lifted with the passage of the Tax Reform Act of 1986 which allowed REITs to both own and manage properties. Now, more than 90% of publicly traded United States REITs are equity REITs that own and manage commercial real estate. Most of their income is derived from rents owned by companies across the nation.
There are certain guidelines and standards in place that must be followed in order for a company to qualify as a REIT in the US. The Internal Revenue Code requires at least seventy five percent of total assets be invested in real estate which realize at least seventy five percent of its gross income from rents from real property or interest from mortgages. They must also distribute at least ninety percent of taxable income to shareholders annually in the form of dividends.
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