Finding the Best REITs
By Eric Hammer
Trying to find the best REITs? Here's a hint - there is no
one "best." Instead, there is the best for you and
the best for someone else. A REIT (or Real Estate Investment
Trust) is kind of like a mutual fund for real estate.
Basically, it's a program where you can buy a share in a large
number of properties all over the world or in your own country
and then make money when the value of those properties go up.
We said it's kind of a like a mutual fund, because the best REITs
will have their hands in multiple properties, allowing you to
gain good exposure to a wide variety of projects without the
need to invest millions of dollars to buy multiple properties
all on your own.
Most REITs are also tracked by a variety of services, such
as Standard and Poors and Moody's Corporation. These companies
will place ratings on the REITs and the best REITs will be the
ones with the highest scores. However, it pays to remember that,
like stocks and mutual funds, REITs can and do lose value (of
course, the best REITs also gain value, which is certainly what
you might hope for when working with one).
How Much Can You Make?
It's impossible to quantify how much money you could make
by investing REITs. Suffice to say that the best REITs should
give you healthy returns in much the same way well managed mutual
funds will give you healthy returns.
Ways to Make More | Related Opportunities
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If you are interested in investing in real estate but for
whatever reason are leery of investing in REITs, there are any
number of other ways to do so. For example, you could become
a house flipper or, if you have the money to do it, you could
simply purchase properties outright, develop them and sell them.
Remember that investing in the REITs, even the best REITs
require doing your homework. You'll want to check on past performance
and see what the current holdings of the REIT you are thinking
about investing in are. Don't just take anyone's word for it
that "these are best REITs to buy into" either. You
need to decide for yourself.
Remember also that as we noted at the beginning of this article,
there is no one "best" when it comes to investing in
REITs. Instead, you need to choose REITs in much the same way
you might choose stocks or mutual funds.
One investor may decide that they want to buy into REITs that
invest aggressively overseas, accepting the fact that this will
inherently mean more volatility, but also potentially more money
since the property values in some developing countries can rise
much more rapidly than those here at home. For others, getting
a fairly safe investment means the best REITs for them are ones
that invest conservatively in established businesses such as
thriving malls where there are already tenants paying rents and
where there will be a slow, but steady rate of return. Again,
it's a matter of your personal situation rather than any objective
criteria. That said, obviously you want to look for REITs which
have good track records and which invest in properties you feel
comfortable with.
Qualifications / Requirements
The only requirement for finding the best REITs is plenty
of time and enough money to invest in REITs once you find the
ones you are looking for. It is possible to get started with
just a few hundred dollars at some REITs, though most will have
minimum investments of at least $1,000.
First Steps
Start by reading as much as you can about REITs and following
various investment articles to learn what the best REITs are
for your needs.
Resources
Check out these helpful resources to learn more about where
to find the best REITs for you:
Wikipedia: Real Estate Investment Trust - A
good basic introduction to what a REIT is.
Personal Finance Help Center: Just What Exactly
Are REIT Funds Anyway? - A good, in depth analysis of what
a REIT is and how they work.
Dividend Detective: How to Find the Best REITs
- A look at one way of choosing which REITs to invest in.
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