Being a landlord is not at all easy. If you have handled this job, you would know that managing your tenants is an absolute nightmare. Apart from having to visit them several times to collect the rent, you will also have to listen to their endless complaints and find solutions to their various problems. The worst thing about these issues is the expenses that you have to deal with. Traveling to collect the rent and dealing with never-ending maintenance needs can lead to high costs. Investing in real estate does not necessarily have to be this hard or expensive. If you want to be a landlord who does not have to do much to turn a profit, then REITs are your solution. Here are some reasons as to why you should consider this investment option as your next power move.
1. Do Nothing
Isn’t this what we all want? Okay, you do need to find the money and invest it in the right place. However, once you buy your shares, you can sit back and relax. Your monthly distribution will go straight into your account without any intervention or inconvenience. Moreover, some companies also offer special distributions for shareholders when some properties are sold for gains. This means that you might get a bonus despite doing nothing as well.
2. Debt-Free Investments
When it comes to real estate investments, you always need good financial backup to support your property. Realtors who buy properties to rent them out have to spend a great deal of money. The more luxurious and appealing the property is, the more you will have to spend. This high expense is the main reason as to why many people opt for loans to finance their properties. If you belong to the group who does not sleep well with too much debt, you will be happy to know that it is possible to invest in real estate investment trusts without having to apply for a loan. Since you can invest any amount of your choice, this method enables you to get involved in the real estate business without deteriorating your debt load.
3. Immediate Diversification
When investing in a REIT, you get the opportunity to diversify your investment portfolio. In this unpredictable economic climate, it is essential for all realtors to create a balance among their assets. All real estate investment trusts own properties in various investment classes. There are companies that specialize in residential properties, while there are others that handle retail companies. You must bet your money on trusts that operate on a wide range of options including retail, residential, industrial and commercial properties.
4. High Liquidity
Of course, one cannot deny the fact that real estate properties can be dangerous and unpredictable. If something goes wrong in the neighborhood, your income can drop significantly. Thankfully, these investments are pretty liquid, which means that you will be able to sell them off without any issue. If you notice any changes in the market, it is best to get rid of the property before it becomes a liability. The key is to set the price close to the market rate. This way, you should be able to sell the property within a day or two.
Of course, the biggest benefit of investing in REIT is the simple tax treatment. Since REIT earnings are not taxed like ordinary income, you will definitely be able to make good profit from this investment.