home |blog |about |archives| contact | jurisdictions | privacy |site map Is A REIT The Right Real Estate Investment For You? By Invest Offshore on February 21, 2011 8:23 PM | No Comments | No TrackBacks 
For many years, investing in the stock market was anything but easy. As an investor, you had to carefully research which stocks to buy, decide how much weight to give to the advice of your broker, then monitor the ticker carefully to determine whether to hold, and when it was time to bail out.
But the advent of mutual funds provided a much more hassle-free path to stock market investing for individuals who liked the idea of turning over the decision-making to experts. By buying shares in a mutual fund, the individual investor placed his money in a pool, alongside the funds of many other shareowners, which was then used to purchase a large portfolio of securities chosen by market professionals. If the fund managers did their homework well, the value of shares in the fund would grow nicely; inevitable losses from some holdings in the portfolio were offset by broad gains elsewhere. And the mutual fund share owner had no day-to-day decisions to make, once he selected the fund that looked right for him. Finally, mutual fund shares were liquid - the individual investor could pull money out of the fund much more easily than a conventional securities owner.
Today, the REIT - Real Estate Investment Trust - brings the mutual fund idea to the field of real estate investing. REITS are perfect for Individuals who would like to position their investment dollars to take advantage of real estate's profit potential, but are wary of the complications of conventional investment choices like rehabs or new construction, or are too busy to acquire the skills needed to navigate the real estate mine field. Instead, they can now buy shares in a REIT and let a team of professionals navigate the mine field.
Almost all REITs fall into two categories. They are either Equity REITs or Mortgage REITs or a hybrid of the two. Equity REITS use their pooled funds to acquire income producing properties - residences, office buildings, shopping centers...etc.. Mortgage REITs invest in income producing paper, by providing mortgages directly to property owners or operators or by purchasing existing mortgages. In both cases, whether from rents or mortgage payments, a REIT must annually distribute as dividends to its shareholders at least 90% of its taxable income.
As with mutual funds, REIT shares are liquid; shares can be sold at almost any time. And, again like mutual funds, the investment is passive - the individual shareholder is only faced with one decision: which REIT to own. All other choices are left to the REIT administrators.
On the other hand, a REIT doesn't give an individual owner any choice in which properties or mortgages are purchased - once you invest in a REIT, you accept the decisions of others.
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A REIT can certainly be a good choice for an investor who's looking for a way to get involved in real estate while keeping the complexities to an absolute minimum. At the same time, you may also want to look into a land investment vehicle that's as hassle-free as a REIT, but offers some other features as well. That vehicle is LandBanking.
Unlike REITs, which are primarily income vehicles, LandBanking is aimed at medium to longer-term growth. The basic LandBanking concept is nothing new - acquire undeveloped real estate parcels that are located just outside burgeoning growth centers, hold the land until local expansion demands make it attractive to developers...then sell at a solid profit.
While you can be your own LandBanker, there are also LandBanking partnerships that make investing as hassle-free as REITs. But in this case, your "share" will be an interest in a carefully selected land parcel, chosen by LandBanking experts for its location and imminent appreciation potential.
If you don't agree with their analysis, you can just move on to the next opportunity. But if you agree, the process is simple and straightforward and once you've become a LandBanker, you can just sit back and watch your land appreciate with no hassles or headaches.
If you'd like to learn more about this LandBanking opportunity - and how it stacks up against REITs, as well as other real estate investment choices - you'll find more information by clicking on the following link:
About the Author
Ty Hallsted is a software developer and real estate investor with a strong interest in marketing and all aspects of wealth creation and protection. He has been developing business software since 1976 and investing in various forms of real estate since the early 1980s. In 2006 he and his wife became LandBankers and also bought land in Costa Rica. They live in Maryland with three children and three grandchildren.
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I think REITs are a great way to invest in real estate. Cole REIT is a good equity REIT to invest in; it's also a non-traded REIT. Cole has a diversified portfolio of retail, office and industrial real estate all across the US. Cole seems to go where the best opportunities are.
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