Benefits of Investing in Real Estate Investment Trusts (REITs)
Next in our “Real Estate Investment Trust (REIT)” series…
The investment vehicle known as the Real Estate Investment Trust (REIT) is an excellent option for the real estate investor to explore in today’s volatile economy.
Read additional information about the basic structure of a REIT…
In a REIT, the investor enjoys several distinct benefits over traditional real estate investment vehicles. Whether the REIT is a public or private entity, the investor owns shares of ownership in a pool of investment capital, which provides the ability to diversify the real estate investment. Profits, paid in the form of stock dividends, are not taxed twice as is typically the case with corporate profits. Dividend yields are often higher in a REIT than most stocks and other investment vehicles.
In Arizona, several public REITs exist, as do a variety of private REIT investment groups. These groups may buy property directly or they may loan money to developers, in which case ownership is maintained by the developer. In the latter case, the investment typically earns income in the form of interest paid on the loan. This scenario does not provide the same level of appreciation as a direct property purchase REIT, however. Hybrid REITs also exist, where some funds are invested directly into real estate holdings and others are loaned to developers.
Here’s a small list of REITs in Arizona that include the Arizona Land Income Corp., Starwood Lodging Trust, and Franchise Finance Corp. of America.
One caveat the investor should keep in mind when investing in private REITs include a lack of liquidity. Most private REITs require that the investment remain in the fund for at least two years, however that may be a strong selling point for many investors. The liquid nature of the stock market, for example, exposes the investor to frequent swings – some significant – in the value of the portfolio. The long term investment nature of a private REIT removes a lot of volatility from the investment equation.
Many high net worth investors prefer to invest in private REITs for just this reason. The income supplements their bond investment income, and offers a lower risk and higher return than many other investment options. Program fees in private REITs are sometimes high, and may range from 10% to 15%, however current economic conditions have seen fees fall in an attempt to attract investors.
Either way, the income stream created by REITs make them an excellent option for the real estate investor to explore.
Looking for Arizona property for your REIT? Watch our “income property” page for our hand-picked selections of current homes for sale in the Phoenix Metro area with CAP Rates of 10% and more.
NOTE: We pride ourselves on bringing you the most informative, up-to-date, and accurate information possible about the often-confusing world of real estate investing. Nothing we post however is intended to be taken as legal advice. You should always contact a licensed legal professional for information and advice about your own unique investment scenarios.
Artisan Real Estate Group is one of the top boutique real estate firms in Arizona. We provide an end-to-end suite of services to our investor clients, including a full range of residential and commercial real estate services, income property location service, investor services, property remodeling, restoration, and rehabilitation, real estate finance consultation, REO and bank-owned property services, trustee sale consultation and bidding representation, and new home builder services. Our international team specializes in helping investors from all over the world with their Arizona real estate transactions. Our goal is to find the best properties with the highest cap rate and ROI for our investor clients. Contact us today to find out how we can help you grow your personal wealth and investment portfolio. Artisan Real Estate Group, http://www.artisanrealestategroup.com/ or call us at (602)644-1280. Email: email@example.com