Real estate investment trusts (REITs) are one of the most common types of real estate investment strategies. REITs allow individual investors to become a part of bigger investments. Such investments are very beneficial for people who do not have enough assets to invest in large projects. In this article, we will tell you everything you need to know about REITs.
REITs are companies that own and operate income-producing real estate. Such real estate can consist of shopping malls, hotels, resorts, etc. REITs have made it possible for everyone to own real estate as a large sum of money isn’t required anymore. It has allowed individuals to become a part of large scale projects with a minimum amount of capital. In short, REITs are companies that invest people’s money on their behalf. In this case, people own their share and the company owns the investment.
Investing through REITs offers liquidation. In other words, you can convert your assets into cash any time you want. REIT shares can be traded on stock exchanges which makes them easy to buy and sell. Moreover, more people can become owners of real estate because of this liquidation.
REITs allow you to diversify your portfolio because entry costs are low. You no longer have to worry about the risk of losing all your money in a single investment. You can invest in multiple REITs with the same amount you may use to buy only one tangible asset. REITs also eliminate the headache of owning and managing the property on your own. The company being invested through does all the work and you only have to take care of your investment.
The fact that real estate’s prices move upwards more than downwards have been of huge advantage for REITs. Since most REITs operate commercial real estate, they have statistically benefitted from commercial real estate’s rising prices. When the prices go up, the value of your shares ultimately increases which proves to be profitable in the long term run.
REIT investments allow you to track the value of your shares at any given time. Unlike the regular real estate where you can’t know what is happening in the market, REITs provide you with a transparent view of the market value of your shares. Furthermore, the whole process of buying or selling REITs is clear and flexible.
Public REITs are traded on major stock exchanges and must abide by the rules of the Security and Exchange Commission (SEC). The performance of public REITs can be easily tracked as they are traded on public exchanges. This transparency makes public REITs more liquid allowing the investors to enter or exit at a lower price. Moreover, their compliance with the quarterly financial reporting as defined by the SEC also increases financial transparency of the investments.
On the other hand, only the people who consider themselves seasoned investors and are willing to do the extra research should consider private REITs. As they are not publicly traded, private REITs don’t offer the same disclosure as do the Public REITs. Private REITs are also at the liberty to make changes to an investor’s portfolio which might prove to be in his best interests. So anyone who is considering private REITs should carefully understand the terms and conditions associated with them.
Vairt is an online decentralized marketplace that uses the blockchain technology to tokenize and liquidate the real estate assets. You can invest in any local or global real estate investment opportunity through our platform from your computer screens with the help of an active internet connection. All you need is set up your digital wallet and once you find a project that best suits your interests and then transfer money from your online wallet. A digital token then will be generated that will represent your ownership of that particular asset which you may also be able to trade in a secondary market.