What Is REIT And How To Earn Attractive Returns?

Real Estate Investment Trusts (REITs) have become increasingly popular among investors looking to diversify their portfolios and earn steady returns from the real estate market. In simple terms, REITs are like buying shares in companies that own and manage real estate properties, such as apartment buildings, office spaces, shopping malls, and industrial facilities. They offer investors the opportunity to participate in the income generated from these properties without the hassle of property management.

Now, let’s explore how a novice investor like Joe can earn attractive returns from investing in REITs:

Joe’s Successful REIT Investment

Joe, who’s new to investing, wants to grow his savings steadily. He decides to try investing in REITs, which are like buying shares in companies that own buildings.

1. Joe Spreads His Money: Joe puts $1,000 into different types of REITs. He invests $400 in apartments, $300 in office buildings, and $300 in stores.
2. Joe Gets Paid Regularly: Every few months, Joe gets a small part of the money the REITs make. It’s like getting rent from the buildings, but Joe doesn’t have to deal with tenants or repairs.
3. Joe’s Money Grows Slowly: Over the years, Joe’s investments have grown. Some of the buildings become more valuable, and the rent they collect goes up a little bit each year.
4. Joe Watches Out for Interest Rates: If interest rates go up, it might be bad for Joe’s REITs. That’s because it can be more expensive for the REITs to borrow money or buy new buildings.
5. Joe Checks on His Investments: Joe keeps an eye on how his REITs are doing. He looks at things like how many people are renting the buildings and how much money the REITs owe.
6. Joe Stays Patient: Even if the value of his investments goes up and down, Joe doesn’t panic. He knows that, in the long run, real estate usually goes up in value.

After 5 years, Joe’s $1,000 investment in REITs has grown to approximately $1,300, including the money he earned from dividends and the increase in the value of his investments. Joe is pleased with the steady growth of his savings through his REIT investments and continues to hold onto them for the long term.