{"id":9925,"date":"2022-06-28T20:10:05","date_gmt":"2022-06-29T01:10:05","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=9925"},"modified":"2022-06-28T20:10:07","modified_gmt":"2022-06-29T01:10:07","slug":"3-things-investing-newbies-should-know-about-real-estate-investment-trusts-or-reits","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=9925","title":{"rendered":"3 Things Investing Newbies Should Know About Real Estate Investment Trusts, or REITs"},"content":{"rendered":"\n

The current rental market is so hot that it makes me wish I had a rental property of my own to lease or list as an Airbnb<\/a>. Then I think of the duties and responsibilities that come with being a landlord<\/a>, and it\u2019s a hard pass for me. As a homeowner, it\u2019s irritating enough to deal with fixing my own toilet or sink from time to time, so I imagine it\u2019d be a nightmare to get that panicked call from a tenant in the middle of the night.<\/p>\n\n\n\n

While active\u00a0real estate investing<\/a>\u00a0may not be my jam, I\u2019m happy to say I\u2019m still able to dabble in the real estate market thanks to my investments in real estate investment trusts (REITs \u2014 pronounced \u201creets\u201d). I\u2019m a real estate writer, not a financial advisor, but I think REITs are a great way to build a solid income-producing investment portfolio.\u00a0<\/p>\n\n\n\n

What Are REITs?<\/h2>\n\n\n\n

REITs are companies that own and operate income-producing real estate in a variety of sectors, including office, retail, health care, warehouses, and hotels. For example, Simon Property Group (NYSE: SPG) is one of the largest retail REITs, owning most and operating most of the shopping malls and outlets in America. <\/p>\n\n\n\n

You can buy and sell REIT shares through a brokerage \u2014 more on that in a bit \u2014 just like other stocks. However, you\u2019ll want to hang on to them for the long term so you can benefit from the dividends. REITs are legally required to pay 90 percent of their taxable income to investors by way of quarterly payments based on the current value of the stock and the number of shares owned.<\/p>\n\n\n\n

Office and retail space have taken a hit during the pandemic for sure, but there are other REIT sectors that have thrived. Data centers in particular can be a solid investment because companies will always need secure places to store their data servers. In fact, investment experts have touted data center REITs as recession-proof investments<\/a>, because companies must sign long-term leases, which guarantees income for the data centers. <\/p>\n\n\n\n

If you already have a retirement plan or work with a financial advisor, it\u2019s worth a discussion to see how REITs might factor into your investment strategy. Here are three things to consider:<\/p>\n\n\n\n

1. REITs make it easy to diversify your investments.<\/h3>\n\n\n\n

One of the hallmarks of a good investment portfolio is diversification. You don\u2019t want to put all of your proverbial eggs in one basket when it comes to your money. With stocks, this would mean concentrating all of your investments in one industry or area, which is risky in case the entire sector gets impacted, as we\u2019ve seen with office and retail space during the pandemic.<\/p>\n\n\n\n

Here is a more expansive list of REIT sectors. If you were to buy even one share of a REIT in each of these sectors, you\u2019d be well on your way to building a diverse portfolio:<\/p>\n\n\n\n