Hey, everyone! How’s it going? Today, I want to help you answer the following: What’s a REIT & how do I invest?
How does investing in REITs compare to private equity real estate funds or just buying real estate on your own?
REITs (Real Estate Investment Trusts) make it possible for anyone to invest in real estate for less than $30 per share.
This topic is important to discuss because real estate makes up a significant percentage of investors’ portfolios, and most millionaires get to where they are because of real estate investing.
Where to Invest in RE
There are 3 major areas of real estate that are available to investors
- Personal RE (home or rental properties than you personally control)
- Private RE funds (privately held funds, visit Fund Launch to learn more)
- REITs or Public RE (we’ll talk about this here*…)
Personal RE is great, but we know that it usually requires a big down payment for it to be worth it; your down payment could be up to $100K.
Additionally, you need to manage these properties yourself or hire someone to do it for you.
Investing in a Private Equity RE fund may call for $100 -$250K.
Although it’s a large amount, this investment doesn’t require any work from the investor.
At the end of the year, you get your tax K1 and a dividend and that’s it!
“Bridger, what if I don’t have the capital for either of those options?”
*This is where REITS or Public RE funds come into play…
REITs and Public RE Funds
Both of these have a pool of investors’ money that is managed and invested by the fund manager.
Because these pools are so large, the fund can invest in multiple properties, therefore diversifying the investment.
When the properties make money, it flows back to the pool and is allocated to the investors and the fund managers.
So, the differentiator between REITs and Private RE funds are the rules around them…
For example, the fund manager of RE funds have the discretion to manage the fund however they want; they can hold on to investors’ money or payout the returns as soon as possible.
REITs, on the other hand, have more rules they have to follow. One example is that 90% of the money made at the properties must be returned to investors.
Like I said in my YouTube video…
This is not financial advice, but if I were you trying to get into real estate, I would start out by investing in REITs; it’s a great entry level investment.Bridger Pennington
The best performing REITs of May 2023 returned between 23 and 43% for only $8 – $34 per share!
Open a brokerage account today to get started!
Well, what’s a REIT & how do I invest?
A REIT differs from other investments because the buy-in is significantly lower and there are more specific rules the fund manager needs to follow.
Investing in REITs is fairly simple because all it requires is opening a brokerage account through various apps and other simple platforms.
Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the author