Getting started in real estate can be exciting, but it can also be intimidating. Where do you even begin? Well, luckily for you, we’re going to take a step-by-step approach to show you just that based on strategies used by firms like Nelson Partners. You’ll learn about real estate investment trusts or REITs and how they work, what type of real estate investments are right for you, how much money you need to get started, and more. So let’s get right to it.
What is a REIT?
A Real Estate Investment Trust or REIT is an investment vehicle that invests in real estate, often by buying income-producing properties like apartments, office buildings, shopping centers, medical facilities, and hotels. REITs are traded on major stock exchanges, which means you can buy in, sell out or even short an investment trust in the same way you’d trade any other publicly-traded entity.
Types of REITs
There are two types of REITs: equity and mortgage. Both are similar in that they invest in real estate assets, but they do so in very different ways.
– An equity REIT is just that – an investment company that invests in real estate by buying, selling, and managing income-producing properties. This type of REIT can be publicly traded on exchanges just like any other company, which means you have the potential to make a lot of money on the share price if their investments pay off. That’s why equity REITs can be considered risky investments because you’re not just investing in the real estate itself but also on how other people perceive this investment to perform. If you’re looking for a steady dividend and don’t mind even if the share price drops, though, an equity REIT may be your best bet.
– A mortgage REIT is slightly different. These firms invest in income-producing properties like an equity REIT, but they’re not traded on exchanges like a normal stock. Instead, mortgage REITs are sold to private investors through the financial service industry, meaning they don’t fluctuate as much with market trends and news because it’s closed off to just a few select individuals rather than the general public. If you’re looking for stability more than anything else without too risky of a potential reward, then you might want to stick to investing in mortgage REITs.
How do I get started?
The first thing you need to do is go down this list and pick out three real estate investments that meet your needs. Remember: this isn’t necessarily an all-inclusive list, but it should give you a good idea of what to start finding.
– For equity REITs, look for investments that pay the largest dividends – not necessarily the ones with the highest potential returns.
– For mortgage REITs, look for those that invest in the safest mortgages like government agencies or large corporations that will be able to repay their debts comfortably.
Once you’ve found three investment opportunities that match your criteria, then you can go ahead and commit some money into one of them, depending on how much you have to spend at this point. Remember: this isn’t a time to be emotional about your decision, so pick an investment based on numbers and facts rather than feelings.