REITs (real estate investment trusts) are a form of real estate fund that combines investor cash to buy and manage real properties. Because of their tax advantages, REITs have grown in popularity as an alternative to direct real estate investing in recent years. They are specifically excluded from paying corporate income taxes, which allows investors to earn better profits on their investments.
Brad Zackson, co-founder and development director of full-service real estate firm Dynamic Star, thinks that small enterprises are the backbone of the American economy. According to the U.S. Small Business Association (SBA), there are over 32.5 million small companies in the United States, accounting for 99.9% of all U.S. enterprises and accounting for 62% of net new employment growth from 1995 to 2020. They are not only economically important, but they also serve as the cornerstone of our local communities. They act as meeting places and allow chances to connect (and work) while also contributing to the general identity of the community.
As compared to other forms of real estate investments, REITs are extremely liquid. Real estate limited partnerships are a newer type of real estate investment that is now available in every state. Real estate limited partnerships enable investors to participate in the ownership, management, and operation of a real estate project without putting up all of the money or taking all of the risks.
Mutual Funds for Real Estate (REMFs)
Real estate mutual funds allow investors to acquire diverse exposure to real estate with a small initial investment. Investing in mutual funds provides investors with a greater asset option than purchasing individual REITs.
Why Should You Invest in Property?
Within an investor’s portfolio, real estate provides a low-risk, high-return investment alternative. According to Zackson, there are several reasons to invest in real estate. Here are a few examples:
It’s an excellent strategy to diversify your portfolio while reducing your risk exposure.
- Real estate can be used as an inflation hedge.
- Leverage (borrowed money) can be used in real estate investments but not in most other forms of investments such as equities and bonds.
- When compared to other traditional forms of income return, real estate is more appealing. It has a greater yield than Treasury bonds (which means you get paid more).
- Real estate is a great investment that can readily exchanged.
- Real estate is a secure investment that provides a consistent stream of revenue.
- Real estate provides tax benefits.
